GIFT  OF 

SEELEY  W.  MUDD 

and 

GEORGE  I.  COCHRAN     MEYER  ELSASSER 

DR.JOHN  R.  HAYNES    WILLIAM  L.  HONNOLD 

JAMES  R.  MARTIN         MRS.  JOSEPH  F.SARTORl 

to  the 

UNIVERSITY  OF  CALIFORNIA 

SOUTHERN  BRANCH 


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LIBRARY, 


,  kiia 


WORKS  BY 

EDWARD  ATKINSON. 

The  Distribution  of  Products.     Second 

Edition,  enlarged,  i2mo  . 

I    50 

The  Industrial  Progress  of  the  Nation 

8vo  . 

2    50 

The  Margin  of  Profit 

Paper          .... 

40 

Cloth           .... 

75 

Taxation  and  Work 

I  25 

G.   P.  PUTNAM'S  SONS, 

27   WEST  23D  ST.,   NEW    YORK. 

TAXATION  AND  WORK 


A  SERIES  OF  TREATISES 


ON 


THE  TARIFF  AND  THE  CURRENCY 


EDWARD  ATKINSON,  LL.D.,  Ph.D. 


"  To  lay  with  one  hand  the  power  of  the  government  on  the  property  of  the 
:itizen,  and  with  the  other  to  bestow  it  upon  favored  individuals  to  aid  private 
enterprises  and  build  up  private  fortunes,  is  none  the  less  a  robbery  because  it  is 
ione  under  the  forms  of  law  and  is  called  taxation." 


Justice  Miller,  in  Loan  Association  vs.  Topeka  (20th  Wallace,  655). 


G.  P.  PUTNAM'S  SONS 

NEW  YORK  LONDON 

27  WEST  TWENTY-THIRD   STREET  24    BEDFORD    STREET,    STRAND 

SC^e  ^nidurbockcr  l^rtss 
1892 


8  042  '1 


Copyright,  189? 

BY 

EDWARD   ATKINSON 

Entered  at  Stationers^  Hall,  London 
By   Edward  Atkinson 


Electrotyped,  Printed,  and  Bound  by 

Ubc  1knicl?crboc(!cr  press,  IRcw  jgorft 
G.  P.  Putnam's  Sons 


\  \  > 


CONTENTS. 


CHAPTER  PAGK 

V 


Introduction 

I.     Occupations.     Distribution  of  Products 
II.     Taxation  Measured  by  Work 

III.  Taxation  Measured  in  Money 

IV.  Principal  Sources  of  Revenue 
V.     How  THE  Tariff  should  be  Reformed    . 

VI.     Taxation  which  the  Government  does  not 

Receive 

^      VII.     British  Tariff  Reform    .... 

^     VIII.     Beggarly  Compensation  of  United  States 

Officials 

IX,     What  Is  Protection  ?       .         .         .         . 


o 

.^  X.     Occupations  that  cannot  be  Protected  by 

f^  Duties  on  Imports 


I 
6 

lO 

22 

26 
32 

39 

45 


57 
61 
69 


XI.     Method  of  Tariff  Reform 
XII.     Protection  by  Exemption  from  Taxation 

XIII.  Free  Trade  the  Objective  Point  . 

XIV.  Attempted  Definition  of  the  Principle  of 

Protection  by  Senators  Sherman,  Hoar, 

AND  Aldrich 76 

XV.     Hamilton's  Policy 85 

XVI.     Tariff  Protection  does  not  Raise  Wages    .     93 
XVII.     Protection    Promotes    War  ;    Free    Trade 

Promotes  Peace 104 


IV 


CONTENTS, 


CHAFTRR 

XVIIl. 

XIX. 

XX. 

XXI. 

XXII. 

XXIII. 

XXIV. 

XXV. 

XXVI. 

XXVII. 

XXVIII. 

XXIX. 

XXX. 

XXXI. 

Index 


Does  Tariff  Protection  Promote  Liberty  ?  i  13 
Progressive  Reduction  of  Duties        .         .123 

Cost  of  a  High  Tariff 131 

Development  by  Free  Commerce  .  .  .  145 
High  Wages  and  Low  Cost  ....  159 
The  Use  of  Machinery  by  Nations     ,         .170 

The  Waste  of  Armies 180 

Senator    Morrill's    Report    on    Canada 

Received.  Food  and  Wages  .  .  •  '93 
Silver,  Bi-Metallism  and  Free  Coinage  .  205 
Volume  of  Trade  ......  220 


Taxation  by  Bad  Money 

How  to  Maintain  Silver  Equal  to  Gold 

The  Issue  Joined 

Personal  Observations — Conclusion 


233 
242 
250 
261 
277 


INTRODUCTION. 


The  principal  difficulty  in  dealing  with  the  tariff  ques- 
tion in  recent  years  has  been  due  to  the  fact  that  the 
evils  of  a  bad  system  of  collecting  our  national  revenues 
are  concealed.  That  is  the  fault  of  almost  every  system 
of  indirect  taxation.  Those  who  suffer  the  most  do  not 
know  what  hurts  them.  There  are  also  great  numbers  of 
people  upon  whom  the  burden  falls  but  lightly  who  would 
even  prefer  to  pay  a  larger  sum  by  indirect  taxation  "  un- 
beknownst-like," than  to  be  obliged  to  submit  to  a  direct 
assessment  like  that  by  which  our  State  and  municipal 
taxes  are  collected. 

The  total  amount  of  direct  taxes  for  the  support  of 
State,  county,  city,  and  town  governments  is  less  than 
the  total  contribution  of  the  people  to  the  support  of  the 
national  government,  and  yet  these  lesser  but  direct  con- 
tributions are  subjected  to  a  sterner  investigation  than 
those  which  are  contributed  to  the  nation.  We  also  get 
proportionately  more  for  our  money  through  the  State 
and  municipal  governments  than  we  do  from  what  we  pay 
for  the  support  of  the  nation,  bad  as  the  expenditures  in  a 
few  of  our  great  cities  may  be. 

The  objects  for  which  State  and  municipal  governments 
are  permitted  to  tax  the  citizens  are  very  strictly  limited, 
and  in  almost  all  the  States  a  limit  has  been  fixed  beyond 
which  cities  and  towns  may  not  incur  any  obligations  for 


vi  INTRODUCTION. 

any  purpose,  without  making  out  a  dear  case  of  necessity 
and  securing  specific  legislation  thereto.  The  rule  laid 
down  in  the  Supreme  Court  in  the  decision  rendered  by 
Judge  Miller,  to  which  reference  is  made  in  the  subse- 
quent treatises,  limiting  the  power  of  taxation  to  public 
purposes  in  the  strictest  sense,  has  been  rigidly  applied 
by  the  courts  to  States,  towns,  and  cities. 

On  the  other  hand,  national  extravagence  and  what  are 
singularly  named  "  liberal  appropriations,"  at  the  cost  of 
tax-payers,  receive  support  from  small  classes  of  very 
influential  persons,  and  are  treated  with  indifference  by 
the  great  mass  of  the  people.  Subsidies  and  bounties  to 
private  undertakings  are  advocated  and  justified  which 
would  not  be  tolerated  for  a  moment  in  any  State  or 
city  administration. 

The  expenditures  of  the  government  of  the  United 
States  in  the  fiscal  year  ending  June  30,  1891,  after 
deducting  the  sum  recovered  from  postal  receipts, 
amounted  to  a  little  over  five  dollars  per  head  of  the 
population.  These  taxes  are  mainly  collected  upon  arti- 
cles of  common  use,  and  they  fall  like  the  dew  of  heaven 
upon  rich  and  poor  alike  in  substantially  even  proportions 
according  to  number  rather  than  by  ability  to  pay.  The 
consumption  of  wool  and  woollens,  of  cotton  fabrics,  of 
iron  and  steel,  and  other  materials,  of  leather  and 
lumber,  of  spirits,  beer,  and  tobacco,  and  of  all  other 
articles  from  which  revenue  is  collected  in  any  consider- 
able measure,  is  very  much  more  uniform  than  the  dis- 
tribution of  property,  real  or  personal,  and  also  very 
much  more  uniform  than  the  incomes  of  the  people. 

If  these  national  taxes  were  assigned  to  the  several 
States,  to  be  included  with  their  own  assessments,  and 
collected  under  a  system  of  direct  taxation,  even  at  the 
per  capita  rate  of  five  dollars  a  head,  the  utmost  scrutiny 


INTRODUCTION.  Vll 

would  be  applied  to  the  expenditures  to  which  this  vast 
sum  of  money  might  be  applied.  It  is  very  certain  that 
under  such  conditions  bounties  to  sugar  planters  would 
not  have  been  granted  ;  the  purchase  of  silver  bullion  at 
the  cost  of  the  tax-payers  would  be  stopped  ;  the  proposi- 
tion to  build  a  great  fleet  of  useless  battle-ships  would 
receive  no  consideration  ;  and  the  improvement  of  some 
obscure  harbors  in  order  to  make  them  navigable  for  cat- 
boats,  or  the  excavation  of  the  channels  of  some  rivers 
which  are  of  no  national  importance,  would  not  even 
be  suggested. 

The  time  had  come  when  it  became  necessary  to  force 
the  masses  of  the  people  of  this  country  to  give  their 
attention  to  the  methods  of  collecting  and  expending  the 
national  revenues.  Two  events  have  enforced  the  right 
attention.  The  tariff  message  of  Grover  Cleveland  and 
the  principles  laid  down  therein  have  challenged  the 
attention  of  the  country,  and  will  be  sustained.  The 
other  event,  which  might  not  have  sufficed  to  command 
general  attention,  except  for  the  courageous  act  of  Presi- 
dent Cleveland,  is  the  enactment  of  the  McKinley  bill. 

It  is  an  old  and  trite  but  yet  true  saying,  that  "  whom 
the  gods  would  destroy  they  first  make  mad."  The  Mc- 
Kinley bill,  framed  for  the  purpose  of  carrying  into  effect 
a  so-called  policy  of  "  Protection  with  incidental  revenue  " 
contains  within  itself  the  germs  of  its  own  destruction. 
Public  attention  having  at  length  become  aroused  to  the 
importance  of  this  subject,  the  demand  for  the  facts  in 
the  case  has  become  imperative. 

In  the  series  of  treatises  which  are  reprinted  in  this 
volume,  which  first  appeared  in  the  Boston  Herald,  the 
New  York  Times,  and  other  daily  papers,  I  have  endeav- 
ored to  make  an  impartial  statement  of  the  account  of  the 
United  States  Government  with  the  people  ;  I  have  also 


Viii  INTRODUCTION. 

endeavored  as  far  as  might  be  in  my  power,  to  bring  the 
bearing  and  effect  of  our  present  system  of  taxation  into 
conspicuous  notice.  Two  official  documents  will  soon 
appear  by  which  my  deductions  and  my  conclusions  may 
be  tried. 

First,  the  exhaustive  investigations  of  Commissioner 
Carroll  D.  Wright  when  fully  reported  will  enable  every 
one  to  discriminate  between  the  rate  of  wages,  or  what 
may  be  called  the  price  of  labor,  and  the  cost  of  that 
labor  in  each  unit  of  product.  It  has  been  customary  to 
deal  with  these  two  elements  as  if  they  were  the  same,  as 
if  a  low  cost  of  labor  per  unit  of  product  necessarily 
ensued  from  a  low  rate  of  wages.  In  fact,  the  very 
reverse  is  apt  to  be  true  ;  to  wit,  as  stated  in  the  treatises, 
high  wages  in  money,  or  in  what  money  will  buy,  are  a 
correlative  or  result  of  a  low  cost  of  production  per  unit 
of  product. 

When  this  principle  of  high  wages  corresponding  to  low 
cost  of  production  is  fully  comprehended,  the  whole  basis 
of  the  discussion  of  the  tariff  question  will  be  profoundly 
altered.  The  most  pronounced  advocates  of  a  policy 
intended  for  or  directed  toward  the  promotion  of  domes- 
tic industry,  the  protection  of  American  labor,  and  the 
development  of  the  home  market,  may  find  themselves 
almost  before  they  are  aware  of  it  advocating  radical 
measures  of  what  is  now  called  Free  Trade  ;  that  is  to  say, 
urging  the  abatement  of  all  duties  except  those  which  are 
imposed  for  tlie  sole  purpose  of  collecting  the  necessary 
revenue  with  the  least  interference  with  the  freely  chosen 
pursuits  of  the  people. 

The  second  report,  which  may  even  convert  some  of  its 
promoters  who  least  expect  such  an  influence  from  it,  will 
be  the  report  which  is  now  being  drawn  up  under  the 
direction  of  the  Finance  Committee  of  the  United  States 


INTRODUCTION.  IX 

Senate  upon  the  course  of  prices  and  wages  in  this  and 
other  countries  for  a  long  term  of  years. 

The  writer  ventured  to  give  in  advance  the  necessary 
conclusions  which  will  be  derived  from  this  report  when- 
ever it  is  made,'  to  some  of  the  members  of  the  Senate 
Committee  when  they  were  first  layiiig  out  their  work  for 
this  investigation.  This  report  will  prove  that  in  this  and 
in  all  other  countries  in  which  modern  mechanism  has 
been  applied,  or  which  have  been  opened  to  commerce  by 
the  railway  and  the  steamship,  the  prices  of  the  necessa- 
ries of  life,  with  a  few  exceptions  (the  most  notable  excep- 
tion being  the  products  of  the  forest),  have  fallen  and  are 
now  almost  as  low  everywhere  as  they  were  in  a  few 
States  most  abundantly  supplied  fifty  years  ago;  quick 
and  ready  intercommunication  among  nations  having  sub- 
stantially equalized  prices  the  world  over.  This  general 
tendency  to  a  reduction  in  the  prices  of  the  necessaries  of 
life  has  been  subject  to  temporary  upward  fluctuations, 
especially  under  the  influence  of  the  Civil  War  in  the 
United  States  and  the  disturbance  of  the  world's  mone- 
tary system  which  ensued  then  and  for  a  time  thereafter. 
This  fall  in  prices  has  been  as  great  if  not  greater  in 
countries  like  Great  Britain,  in  which  there  is  no  protec- 
tive element  in  the  tariff,  as  it  has  been  in  the  United 
States  under  the  highest  tariff  ever  imposed,  or  in  France 
or  Germany  under  a  highly  protective  system. 

Again,  this  report  will  prove  that  there  has  been  a 
steady  rise  in  the  general  rates  of  wages  in  this  and  all 
other  countries.  Specific  exceptions  will  be  found, 
because  the  general  rise  in  rates  of  wages  has  been  accom- 
panied by  a  tendency  of  cities  and  towns  to  increase  in 
population  at  the  cost  of  the  rural  districts.    Certain  parts 

'  Since  the  above  was  written  the  Finance  Committee  has  presented  its 
Report  in  July. 


X  INTRODUCTION. 

of  cities  have  become  congested,  and  the  problem  of  deal- 
ing with  this  lesser  element  or  problem  in  what  is  known 
as  "  the  labor  question  "  has  become  one  of  greater  and 
greater  complexity.  This  report  proving  a  general  reduc- 
tion of  prices  and  a  general  rise  in  the  rate  of  wages, 
without  regard  to  the  tariff  system  of  each  or  either 
country,  will  be  quoted  in  support  of  one  theory  as  well  as 
the  other,  by  the  advocates  of  a  high  tariff  and  of  a  low 
tariff  and  by  the  representatives  of  tariff  Protection  and 
of  Free  Trade. 

But  this  report  will  probably  contain  one  final  summary 
which  will  be  of  the  utmost  service  in  the  discussion  of 
the  tariff  question  ;  or,  if  the  report  does  not  contain  the 
table  indicated  hereafter,  it  will  be  very  easy  to  make 
such  a  table  from  the  data  that  will  be  given  in  it. 

The  evil  effect  of  duties  upon  the  imports  of  crude 
and  of  partly  manufactured  materials  consists  in  causing 
the  price  of  these  materials  to  be  relatively  higher  year  by 
year,  or  at  the  same  date  in  the  country  which  imposes  such 
duties,  than  in  countries  in  which  they  are  free  of  taxation. 

The  way  to  prove  this  will  be  to  give  lists  of  the  prices 
at  wholesale  of  all  the  crude  materials  which  enter  into  the 
process  of  manufacturing,  and  of  all  the  principal  articles 
of  food  in  two  or  three  of  the  chief  markets  of  Europe 
and  in  two  or  three  of  the  principal  cities  of  the  United 
States,  putting  between  these  columns  of  prices  the  rates 
of  duty  which  may  have  been  imposed  upon  each  of 
these  commodities  by  each  country  in  each  and  every 
year  covered  by  the  record. 

From  this  comparison,  line  by  line,  and  year  by  year, 
the  effect  of  each  tariff  of  either  country  upon  the  rela- 
tive cost  of  the  materials  which  enter  into  the  process  of 
manufacturing  and  of  the  principal  articles  of  food,  will 
be  fully  disclosed.  This  table  will  enable  every  one  to 
determine  in  the  simplest  and  surest  manner  whether  true 


INTRODUCTION.  xi 

Protection  for  domestic  industry  can  be  most  fully  assured 
by  exempting  materials  and  food  from  every  form  of 
taxation,  or  by  putting  heavy  taxes  on  materials  and 
food  which  may  be  of  foreign  origin  to  the  relative  dis- 
advantage of  the  country  that  imposes  the  tax.  This 
table  will  also  enable  every  one  to  determine  whether  the 
McKinley  bill  protects  the  industry  of  this  country,  or 
whether  it  promotes  the  manufacturing  supremacy  of 
other  countries. 

When  the  tariff  question  is  brought  down  from  the 
glittering  generalities  and  the  specious  and  plausible  argu- 
ments commonly  presented,  to  this  simple  question  of 
the  relative  condition  in  which  it  places  the  workmen  of 
each  and  every  country,  the  conclusion  of  the  discussion 
and  the  final  decision  will  not  be  far  off. 

The  first  step  has  been  taken  at  the  Republican  con- 
vention for  bringing  about  a  repeal  of  the  McKinley  bill, 
and  for  substituting  a  well-adjusted  measure  of  tariff 
reduction.  This  may  not  be  what  was  intended  either  by 
the  Committee  on  Resolutions,  or  by  the  Chairman  of  the 
Convention,  Mr.  William  McKinley,  Jr.,  himself.  The 
framers  of  the  resolution  may  not  comprehend  its  pur- 
port any  more  than  Mr.  William  McKinley,  Jr.,  compre- 
hends the  tariff  question. 

The  plank  in  the  Republican  platform  on  the  tariff,  if 
logically  construed,  would  render  it  necessary  to  bring  in 
a  more  radical  searching,  and  complete  measure  for  the 
repeal  of  the  McKinley  tariff,  and  the  enactment  of  a 
very  low  tariff,  than  has  been  contemplated  by  any  judi- 
cious person  in  the  Democratic  party.  The  resolution  of 
the  Republican  platform  is  as  follows : 

"  Resolved,  That  on  all  imports  coming  into  competition 
with  the  products  of  American  labor  should  be  levied 
duties  equal  to  the  difference  between  the  wages  abroad 
and  at  home." 


xii  INTRODUCTION. 

Whatever  may  have  been  the  intention  of  the  framers 
of  that  resohition,  if  it  were  carried  into  effect,  it  would 
bring  about  a  reduction  in  the  duties  imposed  under  the 
present  tariff  more  rapidly  than  has  been  contemplated 
either  in  the  Morrison  bill,  the  Mills  bill,  or  any  other 
measure  that  has  been  framed  by  the  promoters  of  tariff 
reform.  This  resolution  will  bring  the  discussion  out 
from  the  glamour  of  crude  theory  down  to  simple  ques- 
tions of  fact. 

Throughout  the  campaign  about  to  ensue  every  Repub- 
lican speaker  should  be  compelled  to  adhere  to  the  terms 
of  this  resolution,  and  to  deal  with  the  problem  of  tariff 
reform  consistently  with  it  in  a  broad  and  general  way, 
subject  to  exception  only  in  respect  to  the  finer  fabrics 
which  depend  upon  style,  fashion,  and  fancy  for  their  sale. 

The  labor  cost  of  manufactured  goods  aside  from  the 
cost  of  materials,  general  expenses,  and  other  charges, 
ranges  from  twenty  per  cent,  in  coarse  textile  fabrics  up 
to  thirty  and  thirty-five  per  cent,  on  the  medium  grades 
of  this  class  of  goods  on  which  so  large  a  part  of  taxation 
is  imposed.  In  respect  to  articles  made  of  metal,  the 
labor  cost  ranges  from  twenty-five  to  fifty  per  cent. ;  in 
some  relatively  unimportant  articles  like  watch-springs  it 
is  more.  Materials  are  assembled  from  all  parts  of  the 
world,  but  in  dealing  with  a  protective  tariff,  whether  we 
'  are  dealing  mainly  with  the  labor  cost  in  the  factory  or 
in  the  workshop,  it  must  be  remembered  that  our  duties 
are  now  imposed  on  the  gross  value,  including  not  only 
labor  but  materials  and  general  expenses,  and  in  many 
instances  in  the  McKinley  tariff  bill  the  duties  exceed 
one  hundred  per  cent,  upon  the  gross  value. 

Any  one  who  affirms  that  these  duties  were  adjusted 
to  compensate  for  any  difference  in  labor  will  have  to 
meet  the  charge  of  insincerity  or  absurdity.     Even  if  a 


INTRODUCTION,  xiil 

difference  in  the  rates  of  wages  such  as  has  been  proved 
to  exist  in  this  series  of  treatises  corresponded  to  a  simi- 
lar difference  in  the  cost  of  labor,  the  general  rate  of 
duties  in  the  McKinley  bill  would  have  to  be  reduced 
more  than  one-half  to  make  it  consistent  with  the  tariff 
plank  in  the  Republican  platform.  In  a  broad  and  gen- 
eral way,  counting  the  labor  cost  at  one-third  of  the  fabric 
and  computing  the  foreign  labor  cost  atone-half  what  it  is 
here,  which  would  correspond  to  the  utmost  claim  ever 
made,  even  then  a  rate  of  duty  of  fifteen  to  twenty  per 
cent,  would  correspond  to  the  terms  of  the  tariff  plank 
in  the  Republican  platform. 

In  other  words,  when  the  taxes  are  removed  from  the 
crude  and  partly  manufactured  materials  which  are  neces- 
sary in  the  processes  of  our  domestic  industry,  we  shall 
compete  either  on  even  terms  or  at  an  advantage  with 
other  countries.  When  that  time  comes,  the  application 
of  the  Republican  plank  may  only  be  made  to  the  labor 
cost  in  the  factory  or  workshop  ;  the  attempt  to  com- 
pensate for  an  alleged  difference  in  the  labor  cost  of  ma- 
terials being  a  manifest  absurdity.  When  the  question 
is  narrowed  down  to  a  definition  or  measure  of  the  differ- 
ence in  wages  between  this  and  other  countries,  nothing 
will  be  found  of  any  material  importance  upon  which  a 
duty  exceeding  twenty-five  per  cent,  could  be  justified, 
and  even  that  would  be  an  unreasonable  concession  to  the 
fear  of  immediate  competition  rather  than  a  rate  that 
could  be  justified  on  any  actual  difference  in  labor  cost 
where  any  exists.  Mr.  E.  B.  Bigelow,  the  framer  and 
chief  promoter  of  the  present  tariff  on  wool  and  woollens  in 
its  first  phase,  was  fully  cognizant  of  these  facts  when  he 
said  that  "  any  branch  of  industry  which  could  not  be 
sustained  by  a  protective  tariff  of  twenty-five  per  cent, 
ought  to  cease  to  exist." 


xiv  INTRODUCTION. 

The  promoters  of  McKinleyism  may  be  compelled  to 
meet  this  issue  by  the  simple  question,  What  is  the  exact 
difference  betiveen  wages  abroad  and  at  home  in  each  import- 
ant class  of  goods  npon  whicJi  duties  are  noiv  assessed? 

The  first  questions  to  be  put  to  those  who  may  support 
the  McKinley  bill  in  disregard  of  this  plank  in  the  Repub- 
lican platform  may  well  be  these :  Dealing  in  the  first 
instance  with  the  imports  in  Class  A,  ''Articles  of  food 
and  live  animals,''  each  man  should  be  asked,  What  is  the 
difference  in  labor  between  the  wages  abroad  and  at  home 
in  the  production  of  breadstufTs  ?  Of  course,  no  honest 
man  can  reply  except  by  saying  that  the  element  of 
wages  in  the  production  of  breadstuffs  in  the  United 
States  is  less  than  it  is  in  any  other  country,  whatever  the 
rate  may  be.  Therefore,  according  to  this  Republican 
declaration,  breadstuffs  should  be  put  at  once  into  the 
free  list.  The  next  question  should  be — What  is  the 
difference  between  the  wages  abroad  and  at  home  in  the 
product  of  provisions,  including  meat,  butter,  and  cheese? 
When  the  resolution  laid  down  in  the  Republican  plat- 
form is  applied  to  these  articles  they  must  be  put  at  once 
into  the  free  list.  The  same  rule  will  apply  to  vegetables. 
The  malignant  duty  upon  potatoes  is  not  and  cannot  be 
justified  by  any  difference  in  the  wages  of  the  labor  cost 
of  the  production  of  potatoes  between  this  and  any  other 
country. 

Passing  next  to  Class  B,  "Articles  in  a  crude  condition, 
zvhich  enter  into  the  various  processes  of  domestic  industry,'* 
on  the  first  application  of  the  principle  laid  down  in 
the  Republican  platform,  which  states  that  there  should 
be  no  duty  on  any  product,  except  one  equal  to  the  dif- 
ference between  wages  at  home  and  abroad,  we  must 
immediately  put  coal  and  coke  into  the  free  list.  Next, 
the  duty  upon  iron  ore   must  immediately  be  removed, 


INTRODUCTION.  XV 

because  wages  in  Pennsylvania,  according  to  the  sworn 
statements  of  the  owners  of  the  mines  give  the  cost  of 
labor  in  each  ton  of  iron  ore  at  seventy-five  cents  per  ton : 
the  present  duty  is  seventy-five  cents  per  ton  ;  that  is  to 
say,  it  is  one  hundred  per  cent,  more  than  it  should  be  ac- 
cording to  the  Republican  tariff  resolution,  for  the  reason 
that  the  labor  cost  in  the  production  of  iron  ore,  espe- 
cially at  the  point  of  largest  production  in  Pennsylvania, 
is  less  than  it  is  anywhere  else  in  the  world  from  which 
any  supply  of  ore  could  be  derived. 

When  the  principle  laid  down  in  the  Republican  plat- 
form is  applied  to  pig-iron,  it  will  be  necessary  to  reduce 
the  present  duty  lower  than  has  yet  been  proposed  in  any 
measure  submitted  by  the  Democrats,  if  not  to  take  it  off 
altogether.  The  one  difificulty  in  the  matter  is  this,  with 
reference  to  pig-iron  and  steel  ingots,  there  is  not  a  mem- 
ber of  the  Republican  Committee  on  Ways  and  Means, 
which  framed  the  McKinley  bill,  including  Mr.  McKinley 
himself,  who  can  state  what  the  difference  is  between  the 
wages  abroad  and  at  home  in  the  production  of  pig-iron 
and  ingot  steel. 

The  allegation  has  been  made  that  most  careful  consid- 
eration was  given  in  framing  the  McKinley  bill  to  this 
element,  and  that  it  was  framed  to  meet  the  terms  and 
conditions  of  what  is  now  the  principal  plank  in  the  Re- 
publican platform.  This  statement  is  not  true  in  fact, 
whatever  the  intention  of  the  framers  may  have  been.  The 
bill  is  wholly  inconsistent  with  this  rule. 

There  are  many  places  in  this  country  where  the  differ- 
ence between  wages  at  home  and  abroad  in  the  production 
of  pig-iron  and  steel  is  in  favor  of  this  country  :  this  cost 
of  labor  is  less,  and  in  some  places  the  rates  of  wages  are 
less,  than  in  some  places  in  Europe.  Both  articles  are 
made  in  a  large  way,  if  not  universally,  at  a  less  labor  cost 


xvi  INTRODUCTION, 

in  this  country  than  they  are  now  in  other  countries. 
This  is  proved  by  the  fact  that  the  representatives  of  the 
principal  works,  where  it  is  well  known  that  these  pro- 
ducts arc  made  at  least  cost,  have  not  disclosed  the  facts 
to  Commissioner  Carroll  D.  Wright.  Therefore,  while  his 
answers  to  this  question  may  show  a  slight  excess  in  the 
labor  cost  in  this  country  as  compared  to  others,  such  is 
not  the  fact.  If  the  facts  were  disclosed  as  to  the  cost  of 
labor  of  iron  and  steel  at  the  most  favorable  points  in  this 
country,  in  the  largest  and  most  effective  works,  they 
would  prove  that  under  the  application  of  the  principle 
laid  down  in  the  Republican  platform,  pig-iron  and  crude 
steel  should  be  put  at  once  into  the  free  list  because  this 
advantage  in  labor  is  with  us. 

Dealing  next  with  the  article  of  wool,  the  difference 
between  the  wages  in  this  country,  say  in  Texas  and 
other  parts  of  this  country  where  sheep  are  raised  in 
great  flocks,  in  comparison  with  Australia  and  New 
Zealand,  even  in  rate  is  in  our  favor,  if  lower  rates  are 
favorable.  The  rate  of  wages  in  Australia  and  New 
Zealand  is  higher,  whatever  the  labor  cost  may  be. 

There  is,  however,  not  a  single  man  who  sustains  the 
McKinley  act,  or  among  its  framers,  who  can  tell  what 
the  labor  cost  of  wool  is  in  any  one  season  in  this  or  in 
any  other  country,  because  it  varies  so  greatly,  season  by 
season. 

There  is  not  a  man  on  the  Republican  side  who  can  sus- 
tain the  duties  on  wool  consistently  with  the  principle 
which  is  laid  down  in  the  Republican  platform.  If  they 
apply  that  principle  they  will  only  be  compelled  to  put 
wool  and  a  great  variety  of  woollen  and  cotton  goods  into 
the  free  list. 

In  fact,  the  application  of  the  Republican  principles 
laid  down  in  the  platform  for  an  adjustment  of  duties  to 


IN  TROD  UC  TION.  X  Vll 

the  difference  in  labor  between  this  and  other  countries, 
would  result  in  a  measure  of  too  revolutionary  a  kind  to 
warrant  the  approval  of  any  judicious  man,  under  the  pres- 
ent conditions  to  which  the  long  existence  of  a  very  high 
tariff  has  brought  many  arts  in  this  country.  This  strict 
application  would  bring  about  a  more  rapid  approach  to 
absolute  Free  Trade  in  the  English  use  of  that  term,  than 
would  be  wise  or  safe  under  any  single  measure,  or  by  any 
single  act  of  legislation. 

Under  these  conditions  it  w^ould  be  judicious  for  all 
advocates  of  tariff  reform  who  desire  to  follow  that  single 
issue  safely  and  surely,  to  put  the  candidates  on  the  Re- 
publican side  to  the  question  for  the  purpose  of  determin- 
ing several  points : 

FIRST,  whether  each  one  comprehends  the  plank  upon 
the  tariff  in  the  Republican  platform  ; 

SECOND,  whether  or  not  they  know  or  can  get  informa- 
tion from  the  leaders  as  to  what  the  difference  in  labor 
between  the  wages  abroad  and  at  home  actually  is ;  and, 

THIRD,  whether  they  are  in  fact  prepared  to  reduce  the 
duties  to  that  measure  or  to  take  them  off  wholly  where 
the  cost  of  labor  is  less  in  this  than  in  any  other  country. 

If  Republicans  are  prepared  to  act  on  this  resolution 
and  to  apply  it  according  to  its  strict  construction,  the 
only  work  which  will  be  left  for  the  Democratic  or  Inde- 
pendent tariff  reformers  will  be  to  prevent  the  Republican 
party  from  undertaking  the  reduction  of  the  tariff  in  such 
a  radical  way  as  to  promote  a  reaction  that  will  be  injuri- 
ous to  the  whole  cause  of  tariff  reform. 

Edward  Atkinson. 

Boston,  June  i6,  1892. 


TAXATION  AND  WORK. 


CHAPTER   I. 

Occupations.    Distribution  of  Products. 

In  TJie  Forum,  for  September,  1891,  the  writer  pre- 
sented a  condensed  statement  of  the  income  and  expen- 
diture of  the  United  States  for  'the  fiscal  year  ending 
June  30,  1889,  in  the  customary  form  of  an  account  cur- 
rent such  as  every  merchant  or  banker  renders  to  his 
correspondents  who  trust  their  money  or  merchandise  in 
his  control.  It  were  well  that  the  government  of  the 
United  States  should  be  held  to  the  same  form  of  ac- 
countability, as  the  national  taxes  are  placed  in  its  hands 
under  the  same  conditions  of  trust. 

Nothing  is  more  common  in  public  discussion,  espe- 
cially on  the  part  of  very  sincere  men  who  represent  what 
is  called  Nationalism,  Collectivism,  and  other  more  or  less 
mild  forms  of  Socialism,  Despotism,  or  Communism,  than 
to  impute  to  the  State  the  possession  of  an  immense  prop- 
erty which  it  should  deal  with  in  a  so-called  liberal 
manner.  Again,  nothing  is  more  common  than  for  shal- 
low and  unthinking  men,  even  in  business  life,  to  advocate 
"  liberal  appropriations  "  by  Congress  for  bounties,  subsi- 
dies and  expenditures  of  all  kinds  that  are  esteemed 
semi-public  enterprises,  but  are  in  fact  undertaken  mainly 
if  not  wholly  for  private  gain. 

I 


2  TAXATION  AND    WORK. 

Now  the  State,  in  the  sense  in  which  that  word  is  used 
to  designate  either  the  nation,  or  each  separate  member 
of  tlie  Union — or  tlie  city  or  the  town — possesses  no 
property  except  public  buildings,  which  have  been  paid 
for  out  of  taxes,  and  the  unsold  portions  of  public  lands. 
The  income  of  the  State  is  wholly  derived  from  taxation 
and  all  its  funds  are  held  in  trust  for  the  public  service 
only.  It  can  impropriate  or  become  possessed  of  property 
only  by  way  of  taxation. 

The  very  definition  of  a  tax  in  the  dictionary,  by  which 
a  court  must  be  governed  in  the  construction  of  revenue 
acts,  is  "  a  rate  or  sum  of  money  assessed  on  the  person  or 
property  of  a  citizen  by  government  for  tJie  use  of  the 
nation  or  state." 

The  definition  of  a  duty  is  also  "  an  impost,  customs, 
tribute,  or  tax.''  Some  persons  hold  that  "  a  tariff  is  not 
a  tax."  A  tariff  is  only  a  list  of  taxes  or  duties.  There 
is  no  difference  between  a  duty  or  a  tax  in  law  or  equity, 
and  no  distinction  can  be  made.  All  the  fallacies  about 
putting  our  burdens  upon  other  nations  by  taxing  imports 
may  be  set  aside.  A  duty  is  a  tax  and  all  the  taxes  that 
the  government  receives  the  people  pay  ;  when  such  taxes 
are  badly  assessed  the  people  may  pay  a  great  deal  more 
than  the  government  receives  ;  or  what  is  perhaps  worse, 
many  people  may  be  deprived  of  the  opportunity  to  apply 
their  work  in  the  most  productive  way  by  a  bad  system 
of  taxation. 

Taxation  is  but  one  of  the  several  methods  by  which 
the  annual  product  of  the  community  is  distributed. 
These  methods  of  distribution  are  named  :  Rents,  Profits, 
Interest,  Salaries,  Earnings,  Wages,  Stealings,  and  Taxes. 

The  annual  product,  which  is  the  subject  of  such  dis- 
tribution, is  the  measure  or  result  of  the  annual  work, 
whether  the  work  be  mental,  manual,  or  mechanical.     It 


OCCUPATIONS.     DISTRIBUTION    OF  PRODUCTS.        3 

corresponds  to  the  effective  work  or  exertion  of  produc- 
tive energy  of  that  part  of  the  population  which  does  the 
work,  numbering  about  one  in  three  of  the  population — 
such  being  the  proportion  occupied  for  gain.  The  aggre- 
gate of  taxation — national,  State,  county,  city,  and  town, — 
so  far  as  the  writer  has  been  able  to  compute  it,  comes  to 
about  six  or  seven  per  cent,  of  the  product ;  it  therefore 
represents  six  or  seven  per  cent,  of  the  whole  work  of  the 
community,  to  which  all  contribute  in  ratio  to  their  con- 
sumption or  use  of  subjects  of  taxation.  National  taxes, 
including  postal  service,  come  to  more  than  one-half  the 
total  burden. 

Out  of  our  present  population  of  over  sixty-five  mil- 
lions (65,000,000)  there  are  about  twenty-three  millions 
(23,000,000)  who  are  at  work  in  the  sense  of  being  "  occu- 
pied for  gain  "  in  professional  and  personal  service,  trade 
and  transportation,  manufacturing,  mechanic  arts  and 
mining,  and  agriculture.  Their  average  earnings  which 
are  the  measure  of  the  value  of  their  product  may  be  at 
the  rate  of  two  dollars  a  day  for  three  hundred  days  in 
the  year — six  hundred  dollars'  worth  for  each  group  of 
three  persons.  But  there  are  a  vastly  greater  number, 
probably  ninety  per  cent,  of  all  who  are  occupied  for 
gain,  who  secure  less  than  that  sum  than  there  are  who 
secure  more  in  the  distribution  of  the  product. 

The  average  product  of  the  whole  working  community 
— mental,  manual,  and  mechanical — includes,  of  course,  the 
share  of  the  product  which  falls  to  capital  as  well  as  to 
labor — to  the  administrative  as  well  as  the  working  force. 
It  represents  a  division  of  the  total  product  at  its  final 
valuation  by  the  total  number  who  share  the  work  in  any 
way. 

In  1880  the  list  of  persons  who  were  occupied  for  gain 
was  made  out  under  four  titles  and  under  each  of  these 


4  TAX  A  TION  AND    WORK. 

titles  the  subdivisions  were  given.  The  subsequent  vari- 
ations in  the  ratio  of  one  class  to  another  have  not  been 
great.  If  we  apply  the  proportions  of  1880  to  the  work- 
ing force  of  the  present  day,  computed  at  23,000,000 
men,  women,  and  young  persons,  we  get  the  following 
results:  These  are  approximately  in  each  thousand 
persons  the  following  divisions  of  occupations  : 

1.  Clergymen,   lawyers,   doctors,   chief  officers  of  banks,   railroads, 

insurance  companies,  and  the   like,  whose  work  is  mental  or 
administrative 40 

2.  Merchants,    tradesmen,    hotel    keepers,    clerks,    salesmen,    sales- 

women, etc 60 

3.  Work  of  a  collective  kind  conducted  in  factories  and  workshops, 

textile,  iron  or  steel,  machine  shops,  boots  and  shoes,  etc.,  etc.      100 

4.  Mechanical   work   of    an   individual   order,   carpenters,    masons, 

blacksmiths,  etc 107 

5.  Personal  service — Domestic  servants,  draymen,  railways  and  ex- 

press, sailors,  waiters,  etc .      131 

6.  Laborers  on  farms,  laborers  not  specified,  and  laborers  in  mines, 

etc 312 

7.  Agriculturists — Farmers,  stock  raisers 250 

Total 1,000 

I  think  that  $600,000  worth  of  product  is  now  the 
average  annual  value  of  the  result  of  the  average  work  of 
each  thousand  persons  who  are  occupied  for  gain  sub- 
stantially in  these  proportions  ;  upon  each  one  of  these 
two  others  depend.  At  this  ratio  our  present  annual 
product,  measured  in  gold,  comes  to  $13,500,000,000. 

Every  tax  imposed  by  nation,  State,  town,  or  city  is  a 
demand  on  the  community  to  give  so  many  days'  work 
to  be  devoted  to  the  service  of  the  State.  If  we  adopt 
two  dollars  a  day  as  the  unit  of  labor  by  which  to  measure 
taxation,  the  analysis  of  the  cost  of  the  government  of 
the  United  States  may  become  a  little  more  interesting 
to  the  masses  who  are  taxed  "  unbeknownst  like  "  for  its 
support,  it  being  observed  that  all  so-called  "  indirect " 
taxes,  that  is  to  say,  all  taxes  which  are  put  upon  articles 


OCCUPATIONS.     DISTRIBUTION  OF  PRODUCTS.         5 

which  enter  into  common  consumption,  are  paid  by  con- 
sumers in  proportion  to  their  consumption  of  such 
articles. 

It  being  assumed  that  no  great  change  has  occurred  in 
this  distribution  of  occupations  since  1880,  the  present 
numbers  who  bear  the  burden  of  taxation  are  as  follows : 

Class  1.     Clergymen,  lawyers,  administrative  officials  of  corpora- 
tions, etc.,  etc q20,ooo 

Class  2.     Merchants,  clerks,  and  other  distributors   1,380,000 

Class  3.     Factory  operatives  and  others  in  collective  work 2,300,000 

Class  4.     Mechanics   working   individually    rather  than   collec- 
tively   2,461,000 

Class  5.     Personal  service  of  all  kinds. 3,013,000 

Class  6.     Laborers 7, 176,000 

Class  7.     Farmers , 5-75o,ooo 

23,000,000 
Computed  population  over 65,000,000 

If  the  joint  product  of  this  great  body  by  whom  the 
work  of  the  country  is  done  can  be  computed  at  two 
hundred  dollars'  worth  per  head,  or  at  six  hundred  dollars' 
worth  for  each  one  of  the  twenty-three  million  persons 
by  whom  the  work  is  done,  then  that  product  is  the  source 
from  which  all  rents,  profits,  interest,  salaries,  earnings, 
wages,  stealings,  and 

TAXES 

are  derived.  Taxation  and  work  are  therefore  synony- 
mous terms  or  different  words  for  the  same  thing. 


CHAPTER   II. 

Taxation  Measured  by  Work. 

In  the  previous  chapter  an  approximate  computation 
was  given  of  the  value  of  our  annual  product.  Given  a 
certain  measure  of  such  product — then  it  follows  that  by 
so  much  as  some  persons  secure  a  larger  share  of  the  whole 
— by  so  much  must  the  share  of  the  others  be  reduced. 
The  share  or  proportion  which  must  be  assigned  to  the 
support  of  government  is  taken  from  those  who  do  the 
work  of  the  country  in  proportion  to  consumption  and 
not  in  ratio  to  the  work  done.  The  case  may  be  stated 
in  other  terms.  A  certain  part  of  every  person's  work 
must  be  devoted  to  the  support  of  the  government,  and 
since  the  revenues  are  derived  mainly  from  the  taxation 
of  articles  of  common  consumption,  therefore  the  cost  of 
government  is  put  upon  the  people  in  proportion  to  their 
consumption  of  the  subjects  of  taxation  rather  than  in 
proportion  to  their  personal  incomes. 

THE  CASE  STATED. 
In  order  to  make  this  case  of  Taxation  and  Work  clear, 
we  will  first  give  a  statement  of  the  expenditures  of  the 
government  in  the  fiscal  year  ending  June  30,  1891,  meas- 
ured by  men's  work  for  one  year  of  three  hundred  days 
at  two  dollars  per  day  ;  we  will  then  deal  with  the  subject 
by  the  customary  method  in  terms  of  money.  It  might 
be  suitable  to  make  this  computation  at  a  less  rate  per  day, 
since  national  taxes  upon  articles  of  common  consumption 

6 


TAXATION  MEASURED  BY    WORK.  7 

are  paid  in  largest  measure  by  people  of  moderate  incomes 
of  less  than  $600  for  each  working  group  of  three,  or  less 
than  $1,000  for  each  family  of  five.  It  is  probable,  to  say 
the  least,  that  the  actual  cost  of  government  when  stated 
in  terms  of  work  would  be  one-fifth  greater  in  number  of 
men  occupied  in  each  year,  than  the  figures  which  are 
given  in  the  subsequent  tables.  This  will  become  appar- 
ent by  recurring  to  the  sorting  of  occupations  in  Chapter 
I.,  taking  observation  of  the  great  proportions  of  laborers, 
mechanics,  factory  operators,  and  persons  engaged  in  per- 
sonal service  as  compared  to  all  others. 

The  best  way  to  put  this  case  is  in  the  customary  form 
of  an  account  current. 

The  United  States,  Debtor  to  the  People. 

By  men 

Worth  of  work.  numbering. 
For  work  done  for  the  support  of  the  Civil 
Service,  Legislative,  Financial,  Judicial, 

Executive,   etc $103,360,086  40  172,266 

For  the  support  of  Army,  Forts  and  Guns.        39,800,799  74  66,335 

For  the  support  of  Navy 15,867,390  53  26,465 

For  the  construction  of  Ships  of  War 10,609,197  15  17,682 

For  the  improvement  of  Rivers 8,760,464  71  14,600 

For  the  improvement  of  Harbors 3,490,162  52  5,817 

For  the  interest  on  the  Public  Debt 37,547,135  37  62,578 

For  the  refund  of  Direct  Taxes  to  States .. .      11,521,49692  19,202 
For  the  Pensions  :  First  Payment  and    Pen- 
sion Roll 124,415,951  40  207,860 

For  the  Surplus  applied  to  Payment  of  Debt     37,239,762  57  62,966 

For  the  Postal  Revenue 65,931,78572  109,886 

Total 1458,544,233  03      764,257 

Which  sum  represents  the  work  of  764,257  men  for  one  year  of  three  hun- 
dred working  days  at  two  dollars  per  day  each. 

In  Other  words,  it  required  the  full  year's  work  of  about 
765,000  men  to  support  the  President,  Cabinet  Ofificials, 
Legislators,  Judges,  Tax  Gatherers,  Postmasters,  Soldiers, 
Sailors,  and  others  who  perform  the  actual  work  of  the 
government ;  including  also  the  pensioners  and  the  claim 
agents  who  batten  upon  them,  and  all  others  who  get  their 
living  out  of  or  by  direct  payment  from  the  government. 


8  TAXATION  AND    WORK. 

In  addition  to  this  sum,  under  present  laws  the  govern- 
ment will  tax  the  people  in  the  next  fiscal  year  for  some 
other  purposes,  to  wit : 

For  the  payment  of  bounties  to  sugar-planters  and  maple-tree  tap- 
pers, about  ten  million  dollars  ($10,000,000)  representing  men's 
work  for  three  hundred  days  at  two  dollars,  to  the  number  of.       16,666 

For  the  purchase  of  four  million  dollars'  worth  of  silver  bullion  per 
month,  to  be  stored  in  the  vaults  of  the  Treasury,  forty-eight 
million  dollars  ($48,000,000) 80,000 


96,666 
Adding  these  last  items  the  facts  will  show  about  eight 
hundred  and  sixty  thousand  men  now  working  for  the 
support  of  the  government  and  for  the  support  of  those 
to  whom  bounties  are  to  be  paid  ;  or,  what  is  nearer  the 
truth,  every  one  who  is  at  work  in  every  occupation  is 
forced  to  continue  the  effort  so  much  longer,  or  to  work  so 
much  harder,  as  the  cost  of  the  government  is  in  ratio  to 
the  total  consumption  of  taxed  articles  by  every  one  who 
does  any  work — mental,  manual,  or  mechanical. 

This  cost  represents  nearly  four  per  cent,  of  all  the 
work  that  is  done  by  all  the  people.  The  work  done  to 
support  State  and  municipal  governments  is  somewhat 
less.  It  may  come  to  two  or  three  per  cent.  When  we 
get  the  full  census  figures  we  may  secure  a  more  adequate 
measure.  In  1880  the  writer  computed  the  ratio  of  all 
taxation  to  product  at  about  seven  per  cent.  Since  then 
the  product  has  increased,  but  taxation  has  somewhat 
diminished,  in  ratio  to  the  product.  If  the  taxes  were 
rightly  framed  and  rightly  spent  we  might  not  complain. 
Compared  to  other  countries  the  burden  is  very  light, 
although  in  many  ways  we  do  not  get  as  much  for  our 
money,  especially  in  cities, — but  that  subject  is  aside  from 
my  present  purpose. 

According  to  the  Blue  Book  lately  issued  by  the  gov- 
ernment, the  total  number  of    persons   employed  in  its 


TAXATION'  MEASURED   BY    JVORJC.  g 

service,  omitting  postmasters,  was  over  160,000,  to  whom 
must  be  added  the  men  in  the  army  and  the  navy,  making 
a  total  of  about  200,000.  The  number  of  mechanics  and 
laborers  who  are  employed  upon  public  works  cannot  be 
computed. 

In  dealing  with  the  cost  of  government  in  terms  of 
work  it  will  be  observed  that  we  may  rightly  compute  the 
number  occupied  in  the  service  itself  and  also  the  number 
occupied  in  making  provision  for  their  support.  It  is  not 
held  that  the  work  of  government  is  not  necessary  and 
conducive  to  production,  but  it  represents  so  much  energy 
diverted  from  actual  production.  If  men  actually  gov- 
erned themselves,  then  all  who  are  now  in  the  service 
would  be  producing  something  for  personal  use  or  ex- 
change, and  there  would  be  no  taxes  to  pay.  The  remis- 
sion of  work  now  exerted  for  and  by  the  government 
would  then  be  substantially  that  of  a  number  of  men  con- 
siderably exceeding  one  million. 

In  other  words,  if  there  are  now  about  23,000,000  men, 
women,  and  children  occupied  for  gain  in  all  the  arts  of 
life,  including  the  support  of  the  government,  we  may 
very  surely  assume  that  very  nearly  if  not  quite  five  per 
cent,  of  the  actual  work  or  energy  of  the  people  is 
expended  in  the  processes  of  the  national  government. 


CHAPTER  III. 

Taxation  Measured  in  Money. 

We  may  now  deal  with  the  pubHc  expenditures  in  the 
customary  way  in  ^\•llich  a  custodian  of  other  people's 
money  should  render  his  account.  In  the  vernacular  a 
good  many  people  desire  to  ask  Uncle  Sam  what  he  has 
done  with  the  product  of  their  A\ork.  Uncle  Sam  replies 
in  the  following  terms  : 

THE  GOVERNMENT  OF  THE  UNITED  STATES, 
In  account  with  THE  TAX  PAYERS. 

EXPENDITURES. 

The  total  expenditure  of  the  government  in  the  fiscal  year 
ending  June  30,  1 891,  including  the  postal  service, 
amounted  to $421,304,470  46 

Recovered  from  postal  service  in  compensation  for  carrying 

mails 65,931,785   72 

Remainder 1355,372,684  74 

Customs  revenue  returned  in  Rebates,  Drawbacks,  etc.  .  .  .        11,937,408  79 

Net  expenditure ._ 1343,435.275  95 

Amount  of  extraordinary  expenditures  in  the  specific  year 

ending  June  30,  iSgi,  which  will  not  recur  again  : 
Refund  to  States  of  Direct  Taxes  levied 

during  the  war |ii, 521,496  92 

Cost  of  Eleventh  Census 5,942,977  13 

117,464,474  05 

Remainder  representing  the  true  cost  of  government  for 

fiscal  year  ending  June  30th,  1891 $325,970,801   90 

Expenditures  in  that  year  which  will  recur  and  for  which 
provision  must  be  made  from  year  to  year,  but  which 
are  not  a  part  of  the  normal  or  true  cost  of  govern- 
ment : 

Pensions  a  little    less    than   one-tliird   for  first   payments 

which  once  paid  are  final 124,415,951  40 

10 


TAXATION  MEASURED  IN  MONEY.  II 

The  true  pension  roll  or  payments  which  are  recurrent  until 
death  amounted  to  less  than  $80,000,000.  It  is  proba- 
ble that  all  claims  under  existing  acts  will  have  been 
audited  before  June  30,  1S94,  when  all  first  payments 
will  have  been  liquidated.  The  annual  pension 
change  will  then  fall  off  one-third  or  more. 

True  cost  of  government .   $201,554,850  50 

Expenses  of  a  variable  but  continuous  character,  to  be  re- 
peated year  by  year  at  the  will  of  each  Congress,  ac- 
cording to  the  ability  of  the  country  to  bear  taxation  : 

On   Public  Buildings $4,811,822   16 

On  Rivers 8,760,46471 

On  Harbors 3, 49°,  162  52 

On  Naval  Vessels 10,609,197  15 

$27,671,646  54 
Disbursements  which  will  be  ultimately  re- 
covered : 
Interest  advanced  on  bonds  issued  to  Pacific 
R.  R.,  to  be  repaid  by  them  and  now 
recovered  in  part,  year  by  year,  and 
accounted  for  in  the  miscellaneous  re- 
ceipts of  the  Treasury, 

$5,408,871   12 
Sinking  Fund  Union  Pacific  R.  R. 

$1,837,098  45 
Sinking  Fund  Central  Pacific  R.  R. 

$481,191   25 

$7,727,160  82 

Continuous   expenditures    on    the    whole 
lessening  year  by  year  : 

Interest  on  public  debt $32,138,264  25 

Indians,  support  of 8,527,469  01 

Soldiers'  Homes,  support  of 3.599.199  8r 

_ -_ $79,663,740  43 

Normal  or  true  cost  of  government  which  is  not  suliject  to 
any  great  variation  and  which  is  diminishing  in  ratio 

to  population 121,891,11007 

Legislative  Department $7,471,598  44 

Executive  Department , 174,897  20 

State  Department 2,1 70,047  47 

Treasury  Department 29,216,319  86 

Interior  Department 15,271,705  34 

Agricultural  Department 1,797,147  16 

Department  of  Labor 143,682  50 

Department  of  Justice 810,112  74 

Judiciary 5,808,080  77 

Postal  Deficiency 6,958,528  14 

Army 36,201,599  93 

Navy 15,867,390  52 

$121,891,110  07 


12  TAXATION  AND    WORK. 

It  will  be  observed  that  the  true  cost  of  the  govern- 
ment was  $121,891,1 10.07,  and  that  the  expenditures  of  a 
constructive  order  which  will  be  constant  for  many  years, 
varying  and  lessening  in  amount  at  the  will  of  each  Con- 
gress, were  $79,663,740.43.  These  two  sums  taken  to- 
gether give  all  the  expenditures  which  are  of  a  recurrent 
description  and  which  may  be  called  normal,  to  which 
pensions  are  to  be  added  : 

Normal $201,554,850  50 

Pensions 124,415,951  40 

Total $325,970,801  90 

Upon  this  analysis  of  the  true  expenditures  of  the 
fiscal  years  ending  June  30,  1891,  future  expenditures 
may  be  predicated. 

Having  credited  the  government  with  these  expendi- 
tures, we  may  now  take  up  the  debit  side  of  the  account. 

Taxation  and  work  are  two  names  for  the  same  thing. 
How  much  money's  worth  is  to  be  charged  to  the 
government  and  what  were  the  sources  or  subjects  of 
taxation  from  which  its  revenue  is  derived  are  given  below. 

The  subjects  of  taxation  and  the  revenue  from  each 
class  are  concisely  given  in  the  Annual  Report  of  the 
Bureau  of  Statistics  of  the  Treasury  Department  upon 
imports  entered  for  consumption 

RECEIPTS  AND   THEIR  SOURCES. 
Customs  Revenue. 
SOURCES.  1890.  1891. 

Duties  on  Alerchavdise — 
Class  A — Articles  of  food  and  live  animals. 

Animals |65I,I26  00  $589,00200 

Breadstufis 1,148,61100  894,64800 

Fish 674,64200  893,96700 

Fruits,  including  nuts 3,915,47000         4,343,62200 

Provisions,    including    meat    and    dairy 

products 494.268  00  636,215  00 


Taxation  measured  in  money. 


13 


SOURCES.  1890.  189I. 

Rice 1,632,07800  2,006,25800 

Salt 394,21500  408,79000 

Sugar  and  molasses 55,150,81900  32,468,33900 

Vegetables 1,008,73900  2,523,03000 

Another 748,28600  782,50300 

Total  Class  A $65,818,25400  $45,546,37400 

Class  B — Articles  in  a  crude  condition  which  enter  into  the  various  pro- 
cesses of  domestic  industry. 

Coal  and  coke $712,630  00  $804,845  00 

Flax,  hemp,  and  other  vegetable  fibre  ..  2,419,797  00  697,224  00 

Hops 515.75800  543,11000 

Iron  and  Steel — 

Ores 868,77600  721,38300 

Pig-iron 995,032  00  550,902  00 

Scrap  iron 254,01700  370,75400 

Steel  ingots,  cogged  ingots,  etc 546,466  00  653,040  00 

Lead  ore,  pigs  and  bars 50,701  00  822,901  00 

Marble  in  block,  rough  or  squared 251,50100  250,36900 

Seeds — Castor,     linseed,     poppy,       and 

garden 619,802  00  520,027  00 

Wood — Pulp 177,33900  216,89300 

Wools,  raw  and  mungo,  flocks,  etc 5,959,412  00  6,758,795  00 

All  other 689,449  00  735, 141  00 

Total  Class  B $14,060,68000  $13,645,38400 

Class  C — Articles  wholly  or  partially  manufactured,  for  use  as  materials  in 
the  manufactures  and  mechanic  arts. 

Cement $435,63100  $830,31100 

Chemicals,  drugs,  etc 4,653,683  00  4,431,446  00 

Cotton  thread,  yarn  or  warp  yarn,  not 

on  spools 409,346  00  425,575  00 

Flax  or  hemp  yarn  or  thread 342,826  00  363,982  00 

Furs,  dressed  on  the  skin,  and  hatters' 

furs 1,071,072  00  1,312,001  00 

Iron  and  Steel — 

Tin-plates 6,746,64500  10,577,11500 

All  other 2,203,933  00  1,830,640  00 

Leather 957,575  00  985,08900 

Paints  and  colors 429,869  00  439,717  00 

Silk,    partially    manufactured    from  co- 
coons,  etc.,  spun  silk,  etc 265,949  00  627,804  00 

Wood,  manufactures  of 1,203,49000  1,149,13200 

Woollen  and  worsted  yarns 1,270,08700  1,141,55700 

All  other 1,251,61600  1,025,11400 

Total  Class  C $21,241,72200  $25,139,48300 


14  TAX  A  TIOAT  AND    WORK. 

SOURCES,  1890.  I89I. 

Class  D — Manufactured  articles,  ready  for  consumption. 

Books  and  otlier  printed  matter $713,859  00  $621,606  00 

Bruslies  of  all  kinds,  etc 225,21900  313,37200 

Buttons 665, 146  00  525,949  00 

Carriages,  and  parts  of 158,509  00  209,291  00 

Clocks  and  watches,  and  parts  of 547,909  00  604,626  00 

Cotton,  manufactures  of 6,783,438  00  8,721,944  00 

Earthen,  stone,  and  chinavvare 4,005,745  00  4,660,477  00 

Flax,  hemp,  etc.,  manufactures  of 8,685,735  00  7,935,059  00 

Glass  and  glassware 4,215,83900  4,532,22000 

Iron  and  Steel — 

Cutlery 1,139,76600  861,07600 

Machinery 1,232,267  00  1,255,661  00 

All  other 1,397,270  00  1,439,600  00 

Leather — Cloves  and  other  manufactures 

of. 2,838,628  00  3,159,924  00 

Metals,  not    elsewhere    specified,    com- 
positions and  manufactures  of 1,152,949  00  2,390,394  00 

Paper,  and  manufactures  of 542,393  00  871,51900 

Straw,  manufactures  of 22,775  00  247,192  00 

Wood,  manufactures  of , 640,646  00  822,102  00 

Wool,  manufactures  of — 

Carpets  and  carpeting 790,754  00  829,064  00 

Cloths 11,702,13400  10,537,96900 

Dress  goods 16,490,94800  16,616,30200 

Flannels 854,81300  295,29300 

Wearing  apparel — 

Clothing,     ready-made,    cloaks,     dol- 
mans, etc 1,010,13400  1,524,94700 

Hats 5,23600  12,51100 

Knit  fabrics 1,242,65600  779,09900 

Shawls  628,043  00  509,162  00 

Webbings,  gorings,  etc 359,038  00  300,577  00 

All  other  wearing  apparel 2,587,681  00  2,104,807  00 

All  other ,, 2,197,67300  1,655,32700 

Total  class  D $72,837,203  00  174,397,070  00 

Class  E — Articles  of  voluntary  use,  luxuries,  etc. — 

Art  works — Painting  and  statuary $445,934  00  $287,807  00 

Cotton  laces,  edgings,  and  embroideries,  4,498,785  00  5,799,291  00 

Fancy  articles — 

Dolls  and  toys 727,16800  776,78100 

Feathers  and  downs 465,226  00  447,581  00 

Feathers  and  flowers,  artificial 589,638  00  670,736  00 

Perfumery,  cosmetics,  and  toilet  arti- 
cles   283,57900  300,61800 

Pipes  and  smokers'  articles 173,484  00  233,373  00 

All  other 844,679  00  378,914  00 

Firecrackers. . , , 273,001  00  439,520  00 


TAXATION'  MEASURED  IN  MONEY.  1$ 

SOURCES.  1890.  189I. 

Flax  and  Hemp — 

Laces,  edgings,  embroideries,  etc....  434,201  00         1,078,195  00 

Jewelry  and  precious  stones 1,466,131  00         1,505,803  00 

Liquors — 

Malt  liquors  and  extract 726,683  00  835,922  00 

Spirits,  distilled   3,129,42400  3,437,571  00 

Wines 4,662,00400  5,147,76500 

Musical  instruments 432,882  00  475,203  00 

Silk,  manufactures  of — 

Dress  and  piece  goods 5,370,09800  5,225,34800 

Handkerchiefs 105,13800  323,47000 

Laces,  embroideries,  etc 1,907,596  00  1,797,205  00 

Ribbons 1,026,59300  896,76500 

Velvets,  plushes,  etc 2,535,244  00  2,843,264  00 

Wearing  apparel 626,54500  1,429,48100 

Webbing,  goring,  suspenders,  etc 180,901  00  360,759  00 

All  other 6,927,69000  5,857,06800 

Tobacco  and  manufactures  of ^3. 317,368  00  16,172,277  00 

All  other., 209,25500  341,65800 

Total  class  E $51,359,21700    $57,062,37500 

Total  duty  collected — 

Regular 1225,317,076  00  $215,790,686  00 

Additional  and  discriminating ai,222,()(ii  00      /'i, 095, 015  00 

Total  dues  collected  on  merchandise. . . .  $226,540,037  00  $216,885,701  00 

Tonnage  tax 565,86010  520,33346 

Miscellaneous 2,562,68747         2,116,17077 

Total  customs  revenue $229,668,584  57  $219,522,205  23 

a  Of  this  amount  $1,102,645  was  duty  equivalent  to  internal  revenue  tax. 
b  Of  this  amount  $974,360  was  duty  equivalent  to  internal  revenue  tax. 

Internal   Revenue. 

Tax  collected  on — 

Spirits $76,539,00262  $79,626,09351 

Tobacco.... 32,443,50992  32,573,73574 

Fermented  liquors ,  25,494,798  50  28,192,327  6g 

Oleomargarine 619,205  72  871,488  44 

Special  taxes  on  manufacturers,  dealers, 

etc.,  and  miscellaneous 7,510,189  05  4,422,604  06 

Total  internal  revenue $142,606,705  81  $145,686,24944 

Postal  Service. 
Revenue  from $60,882,097  92     $65,931,785  72 


1 6  TAX  A  TION  AND    WORK'. 

Miscellaneous. 

SOURCES,  1890.  1891. 
Profits  on  coinage,  bullion,  deposits,  and 

assays $10,217,24425  $7,701,99182 

Sales  of  public  lands 6,358,272  51  4,029,535  41 

Fees — Consular,  letters-patent,  and  land,  3,146,692  32  3,019,781  84 

The  District  of  Columbia 2,809,130  93  2,853,897  74 

Sinking  Fund  for  Paci tic  Railways 1,842,564  52  2,326,359  37 

Tax  on  national  banks 1,301,326  58  1,236,042  60 

Customs  fees,   fines,  penalties,   and  for- 
feitures   1,299,324  52  966,121  82 

Repaymentof  interest  by  Pacific  railways,  705,691   52  823,90404 

Sales  of  Indian  lands 372,288  15  602,545  38 

Nashville     and     Chattanooga     Railroad 

Company 500,000  00 

Soldiers'  Home,  permanent  fund 308,886  99  308,648  34 

Immigrant  fund 241,464  00  292,271  00 

Tax  on  seal  skins 262,50000  269,67388 

Sales  of  government  property    192,123  99  259,379  05 

Deposits  for  surveying  public  lands 112,314  79  131,422  80 

Sales  of  ordnance  material 122,668  01 

Sales  of  condemned  naval  vessels 78,037  36 

Depredations  on  public  lands 35,852  37  55,905  83 

Other  miscellaneous  sources 1,600,014  81  1,825,806  35 

Total  miscellaneous $30,805,692  25  $27,403,992  64 

Total  receipts 463,963,080  55  458,544,23303 


CHAPTER  IV. 
Principal  Sources  of  Revenue. 

The  startling  fact  which  appears  upon  the  first  analysis 
of  the  sources  of  the  national  revenue  is  that  what  are 
known  as  the  miscellaneous  permanent  receipts  of  the 
government  which  are  derived  from  other  sources  than 
the  ordinary  internal  and  customs  taxes,  averaging  twenty- 
five  million  dollars  a  year,  when  combined  with  the 
revenue  from  domestic  and  imported  liquors  and  tobacco, 
sufficed  to  cover,  within  a  small  fraction,  all  the  expendi- 
tures of  the  government  of  every  name  and  nature 
except  the  disbursements  for  pensions  in  the  fiscal  year 
ending  June  30,  1891,  and  will  more  than  suffice  for  the 
same  purposes  in  the  present  fiscal  year  which  will  termi- 
nate June  30,  1892. 

In  other  words  the  revenue  now  derived  from  miscel- 
laneous permanent  receipts  is  now  in  excess  of  the  interest 
on  the  public  debt  and  the.  revenue  from  liquors  and 
tobacco  is  now  in  excess  of  the  disbursements  for  the 
civil  service, — the  judiciary,  the  army,  the  navy,  public 
buildings,  fortifications,  the  construction  of  naval  vessels, 
rivers,  harbors,  the  support  of  Indians  and  even  the  prob- 
ably unconstitutional  and  wholly  unlawful  misappropri- 
ation of  the  revenue  to  bounties  to  sugar  planters  and 
maple-tree  tappers. 

In  dealing  with  the  figures  of  this  account  we  may 
first  put  down  what  are  called  the  miscellaneous  perma- 

17 


1 8  TAXATION  AND    WORK'. 

nent  receipts.  They  consist  of  the  sales  of  pubHc  lands, 
consular  fees,  interest  in  part  recovered,  and  contributions 
to  the  sinking  fund  of  the  Pacific  Railways,  incomes  from 
trust  funds  for  soldiers'  homes,  sales  of  government  prop- 
erty, taxes  on  property  in  the  District  of  Columbia, 
profits  on  coinage,  and  some  other  small  matters ;  to 
which  may  be  added  bank  taxes,  taxes  on  oleomargarine, 
and  other  internal  revenue  receipts  distinct  from  liquors 
and  tobacco ;  all  of  which  amounted  in  the  fiscal  year 
ending  June  30,  1891, 

To 128,392,877  55 

The  revenue  attributable  to  liquors  and  tobacco  in  the 
same  fiscal  year  was  as  follows  : 

Internal  Revenue,  spirits %  83,335,963  64 

Customs  Revenue,  spirits 3,437.571  oo 

Customs  Revenue,  wine 5,229,833  00 

Internal  Revenue,  beer 28,565,129  92 

Customs  Revenue,  beer 835,922  00 

Internal  Revenue,  tobacco 32,796,270  97 

Customs  Revenue,  tobacco 16,172,277  00 

Total  revenue  from  liquors  and  tobacco $170,372,967  53 

Total  with  permanent  receipts $198,765,845  08 

By  reference  to  the  previous  statement  of  expenditures 
in  Chapter  III.,  it  will  be  observed  that  the  normal 
expenditures  of  the  government  in  the  same  year  were 

Cost  of  government,  rivers,  harbors,  naval  vessels, 
Indians,  interest  on  debt,  and  all  other  disbursements 
of  a  recurrent  kind  except  for  ])ensions $201,554,850  50 

The  deficiency  of  revenue  from  liquors  and  tobacco  and 

permanent  sources  was  only 2,789,005  42 

The  miscellaneous  permanent  receipts  have  not  varied 
greatly  for  many  years.  The  average  revenue  from  liquor 
and  tobacco — 


PRINCIPAL   SOURCES  OF  REVENUE.  I9 

From  1871  to  1880,  was $112,000,000  00 

From  1881  to  1890,  was 142,000,000  00 

In  the  fiscal  year  ending  June  30,  1889,  it  was 148,883,778  00 

*•             "                        "             1890,     "      163,490,778  00 

••             "                        "             1891,     "      170,372,96700 

It  comes  to  between  $2.60  and  $2.70  per  head. 

On  this  basis  the  revenue  from  liquors  and  tobacco  for  the 

fiscalyear  ending  June  30,  1S92,  will  probably  exceed. .  $180,000,000  00 
The  permanent  receipts  may  be  computed  at 25,000,000  00 

Total $205,000,000  00 

On  the  other  hand,  the  interest  account  has  been  re- 
duced about  $5,(X)O,O0O,  so  that  if  the  present  Congress 
shall  not  exceed  the  appropriations  of  the  last,  these 
sources  of  revenue,  liquors,  tobacco,  and  miscellaneous 
permanent  revenues,  will  yield  at  least  $15,000,000  in 
excess  of  all  charges  except  pensions.  This  sum  will 
more  than  cover  bounties  on  sugar,  if  the  Supreme  Court 
permits  such  bounties  to  be  paid. 

The  revenue  from  customs  after  deducting  that  de- 
rived from  liquors  and  tobacco  may  therefore  be  dealt 
with  as  the  source  from  which  pensions  are  to  be  paid 

In  the  fiscal  year  ending  June  30,  1891,  the  total  revenue 

from  customs  was $220,488,327  05 

Amount  returned  in  rebates  and  drawbacks 11,937,408  79 

True  customs  revenue $208,550,918  26 

Already    set    off   against    normal    expense   the    customs 

revenue  from  liquors  and  tobacco 25,675,603  00 

$182,875,315  26 

Duties  removed  under  last  tariff  bill  : 

Sugar $32,468,339  00 

Some  other  petty  articles,  which  have  been  added  to  the 
free  list,  make  the  probable  reduction  of  revenue 
through  the  remission  of  taxes 35,000,000  00 

Balance , $147,875,31526 


20  TAX  A  TION  AND    WORK. 

On  the  other  hand,  the  customs  revenue  may  be  com- 
puted for  the  fiscal  year  ending  June  30,  1892,  upon  the 
supposition  that  the  increased  revenue  now  accruing  from 
the  advance  in  rates  on  tin-plates,  wool  and  machinery, 
of  which  the  imports  are  increasing,  will  more  than  offset 
the  reduction  of  revenue  due  to  the  advance  in  rates 
upon  other  goods.  The  revenue  from  customs  on  other 
articles  than  liquors  and  tobacco  for  the  present  fiscal 
year  may  therefore  be  estimated  at  $160,000,000,  which 
would  correspond  to  the  estimate  of  the  Secretary  of  the 
Treasury. 

Estimate  of   pensions   as  given  by   the    Secretary  of   the 

Treasury $125,000,000  00 

Excess  of  customs  revenue %  35,000,000  00 

This  excess  may  be  applied  to  additions  to  the  free 
lists,  as  we  are  far  in  advance  of  the  requirements  of  the 
sinking  fund  for  reduction  of  debt. 

In  dealing  with  the  government  account,  the  simplest 
way  is  to  pay  no  regard  to  what  are  called  the  require- 
ments of  the  sinking-fund  act.  It  provides  for  nothing 
but  a  sort  of  hocus-pocus  or  juggle  in  bookkeeping,  or  in 
the  method  of  keeping  the  national  accounts.  As  a  mat- 
ter of  fact  the  framers  of  the  act  never  dreamed  of  the  rapid 
payment  of  our  debt  ;  the  liquidation  is  already  far  in 
advance  of  what  they  wished  to  secure. 

In  dealing  with  this  excess,  consideration  may  be  given 
to  the  classification  of  dutiable  imports  with  reference  to 
their  use,  and  for  this  purpose  we  may  reverse  the  cus- 
tomary order,  placing  the  articles  which  may  be  rightly 
subject  to  revenue  duties  at  the  head. 

The  following  table  gives  the  revenue  from  customs  in 
the  fiscal  year  ending  June  30,  1891,  omitting  sugar,  sisal, 
and  other  vegetable  fibres,  now  on  the  free  list ;  also 
omitting  liquors  and  tobacco  : 


PRINCIPAL   SOURCES  OF  REVENUE.  21 

Class  E — Articles  of  voluntary  use,  luxuries,  etc.,  etc $31,386,772  00 

Class  D — Manufactured  goods,  ready  for  consumption.    . . .     74,397,070  00 


$105,783,842  00 


These  two  classes  more  than  cover  the  annual  pension  roll 

computed  separately  from  arrears  or  first  payments.) 
Class  C — Materials  partly  manufactured,  which  are  used  in 

domestic  industry,  including  tin-plates $25,139,483  00 

Class  B — Articles  in  a  crude  condition,  commonly  called  raw 

materials 12,948, 160  00 

Class  A — Articles  of  food  and  live  animals 13,078,035  00 

Fines,  Penalties  and  miscellaneous 3, 73 ii  599  23 


Total $160,681,039  23 

Pensions  estimated  by  the  Secretary  of  the  Treasury 125,000,000  00 


Excess $  35,681,039  23 

On  the  basis  of  the  treasury  estimates  the  excess  could  be 
appropriated  to  the  abatement  of  duties  on  all  articles 
of  food,  omitting  fruits  and   nuts  by   which  remission 

the  reduction  of  revenue  would  be    $9,000,000  00 

All  articles  in  a  crude  condition  could  then  be  added  to  the 

free  list 13,000,000  00 

Abatement  of  taxes  on  tin-plates 11,000,000  00 


}, 000,000  00 


and  yet  the  excess  would  not  be  exhausted. 

I  am  aware  that  this  estimate  of  surplus  differs  in  slight 
measure  from  the  computations  submitted  by  the  Secre- 
tary of  the  Treasury.  It  may  be  remarked,  however, 
that  the  conservative  estimates  of  prospective  revenue 
submitted  by  the  executive  ofificers  of  the  Treasury  for 
very  many  years  have  almost  invariably  been  exceeded 
and  that  it  is  now  apparent  that  even  the  estimates  which 
I  have  taken  in  the  present  computations  are  already 
certain  to  be  exceeded,  even  in  the  present  fiscal  year. 


CHAPTER  V. 

How  THE  Tariff  should  be  Reformed. 

In  the  previous  chapter  it  has  been  computed  that  the 
present  Congress  in  its  second  session  may  rightly  deal 
with  an  excess  of  revenue  above  all  expenditures  of  every 
kind,  of  $35,000,000  or  more. 

If  in  the  interval,  assurance  shall  be  given  that  credit  will 
no  longer  be  shaken  by  a  prospective  debasement  of  the 
standard  of  value  through  the  free  coinage  of  silver  dollars 
of  full  legal  tender  which  are  now  worth  after  being 
melted  less  than  seventy  cents,  this  surplus  income  or 
revenue  may  be  much  larger. 

It  may  be  remarked  that  the  revenues  already  received 
the  present  fiscal  year  fully  warrant  the  expectation  of  a 
normal  increase  on  liquors  and  tobacco,  while  the  customs 
revenue  may  be  largely  in  excess  of  the  estimates  upon 
which  the  above  computations  are  made.  It  is  almost 
certain,  therefore,  that  the  excess  of  revenue  from  liquors, 
tobacco,  and  permanent  receipts  in  the  fiscal  years  ending 
June  30,  1893  and  1894,  will  suffice  to  cover  any  increase 
in  pensions  above  the  estimate  for  the  present  year.  In 
a  recent  hearing, the  Commissioner  of  Pensions  testified 
that  pensions  would  reach  the  highest  point  under  exist- 
ing laws  in  the  fiscal  year  ending  June  30,  1894,  and  after 
that  would  diminish  rapidly. 

But  it  will  be  borne  in  mind  that  with  the  relief  to 
domestic  industry  from  the  abatement  of  duties  proposed 

22 


HO  IF    THE    TARIFF  SHOULD   BE   REFORMED.         23 

to  the  amount  of  $33,000,000,  the  duties  on  manufactured 
goods  may  also  be  considerably  reduced  ;  then  with  the 
ensuing  prosperity  and  the  great  increase  in  the  export  of 
farm  products  (especially  canned  fruits  and  milk  promoted 
by  free  sugar  and  tin-plates)  of  which  free  exports  we 
already  witness  the  beginning  since  sugar,  sisal,  manilla, 
and  some  other  articles  were  put  in  the  free  list — our 
dutiable  imports  would  be  very  greatly  increased,  because 
our  general  consumption  can  always  be  stimulated  by  a 
reduction  in  prices.  At  the  same  time  wages  would  rise 
with  the  greater  activity  in  manufactures,  agriculture,  and 
commerce. 

Under  these  conditions,  substantially  all  the  partly 
manufactured  articles  which  enter  into  the  processes  of 
domestic  industry  could  very  soon  be  added  to  the  free 
list. 

The  alternative  would  be,  after  having  put  all  articles 
of  food  and  all  crude  materials  into  the  free  list,  and  hav- 
ing reduced  the  duty  on  manufactured  goods  in  propor- 
tion to  the  reduction  on  materials,  then  to  adjust  the 
duties  by  a  reduction  by  percentage,  year  by  year,  until 
we  reached  an  equilibrium  of  expenditure  with  the  in- 
come derived  from  liquors,  tobacco,  and  dutiable  imports 
of  the  nature  of  luxuries  or  of  purely  voluntary  use. 

Another  method  of  tariff  reform  might  be  considered. 
One-half  of  the  specified  articles  on  which  duties  are  now 
imposed,  yield  so  insignificant  a  revenue,  that  if  put  into 
the  free  list  the  amount  of  tax  abated  would  not  exceed 
fifteen  per  cent,  of  the  total  revenue.  This  change  would 
greatly  promote  commerce,  and  might  diminish  the  cost 
of  collecting  customs  even  more  than  one-half. 

The  way  to  tarifif  reform  is  very  plain — the  will  is  not 
wanting — what  is  now  needed  is  concentration  upon  a 
definite  and  consistent  plan  of  tariff  reduction. 


24  TAXATION  AND    WORK. 

The  preparation  of  such  a  measure  is  a  very  simple  mat. 
ter,  provided  those  who  undertake  to  frame  it  proceed 
upon  the  rule  that  all  taxes  that  the  people  pay  the  gov- 
ernment should  receive. 

There  have  been  three  attempts  to  reform  the  war 
tariff  of  this  country.  The  present  system  is  intellectually 
dead  ;  it  lives  only  by  a  vis  inertia  and  through  an  unde- 
fined fear  of  change.  The  Tariff  Commission  appointed 
by  a  Republican  administration  made  one  futile  attempt. 
The  Democratic  Congress,  which  reported  the  Mills  Bill, 
made  the  second  effort.  The  last  Congress  brought 
forth  a  measure  known  as  the  McKinley  Bill,  which  is 
the  scorn  and  contempt  in  its  dutiable  list,  even  of  a 
majority,  or  at  least  of  a  large  minority,  of  those  who 
voted  for  it. 

The  movement  of  the  people  is  slow  but  sure.  Every 
great  reform  in  this  country  has  passed  through  the  same 
sequence  of  blind  and  misdirected  effort,  until  at  last 
when  the  time  has  arrived  the  true  leaders  have  taken 
their  places,  and  the  reform  has  been  accomplished. 

The  will  of  this  people  now  is  that  taxation  shall  be 
reduced ;  that  revenue  measures  shall  be  so  framed  that 
the  government  shall  receive  all  the  taxes  that  the  people 
pay ;  that  the  civil  service  shall  be  maintained  on  the 
basis  of  honest  and  faithful  service,  without  regard  to 
party  politics. 

The  Supreme  Court  of  the  nation  has  defined  the  prin- 
ciple of  taxation  by  which  Congress  must  in  the  end  be 
governed.  In  Loan  Association  vs.  Topeka,  Justice  Mil- 
ler established  the  limits  of  taxation  in  terms  that  admit 
of  no  evasion  (20th  Wallace,  655). 

"  The  power  to  tax  is  therefore  the  strongest,  the  most 
pervading  of  all  the  powers  of  government,  reaching 
directly  or  indirectly  to  all  classes  of  the  people.     This 


HOW   THE    TARIFF  SHOULD  BE  REFORMED.         25 

power  can  as  readily  be  employed  against  one  class  of 
individuals  and  in  favor  of  another,  so  as  to  ruin  one 
class  and  give  unlimited  wealth  and  prosperity  to  the 
other,  if  there  is  no  implied  limitation  of  the  uses  for 
which  the  powers  may  be  exercised.  To  lay  with  one 
hand  the  power  of  government  on  the  property  of  the 
citizen,  and  with  the  other  to  bestow  it  upon  favored  in- 
dividuals to  aid  private  enterprises  and  build  up  private 
fortunes,  is  none  the  less  a  robbery  because  it  is  done 
under  the  forms  of  law  and  is  called  taxation.  This  is  not 
legislation.     It  is  a  decree  under  legislative  forms." 

The  huge  abundance  with  which  this  country  is  en- 
dowed, coupled  with  the  continental  system  of  absolute 
Free  Trade  among  the  several  States,  over  a  wider  area  and 
among  a  greater  number  of  people  than  ever  enjoyed  such 
rights  before,  has  saved  us  from  any  disaster  like  that  in 
which  the  protective  system  culminated  in  Great  Britain 
in  1840. 

Yet  signs  are  not  wanted  of  a  very  false  distribution  of 
products  —  notwithstanding  the  rapid  accumulation  of 
wealth  and  the  undoubted  progress  which  has  ensued  in 
spite  of  the  obstructions  to  commerce — great  centres  of 
poverty  are  found  in  our  midst  and  great  classes,  espe- 
cially in  agriculture,  are  suffering  from  causes  which  they 
cannot  define,  and  which  in  some  instances  they  propose 
to  remedy  by  measures  which  would  be  worse  than  the 
disease. 

The  one  merit  of  the  McKinley  Bill  was  its  free-trade 
part.  The  placing  of  sugar,  fibres,  and  some  other  small 
articles  upon  the  free  list  has  already  given  an  impetus  to 
exports,  which  is  but  an  example  of  what  may  follow  in 
yet  greater  measure  when  a  tariff  for  revenue  is  enacted 
which  shall  be  so  framed  that  all  the  taxes  that  the 
people  pay  the  government  will  receive. 


CHAPTER  VI. 

Taxation  Which  the  Government  does  not 
Receive. 

In  dealing  with  the  proposed  remission  of  taxes  on 
crude  and  partly-manufactured  materials,  consideration 
must  be  given  to  the  relative  burden  of  one  class  of  taxes 
as  compared  to  another. 

In  twelve  years,  1880  to  1891  inclusive,  the  duties  upon 
the  imports  of  articles  of  luxury  or  of  voluntary  use,  en- 
tered at  a  valuation  at  the  port  of  shipment  (disregarding 
fractions  in  this  and  the  subsequent  statements). 

Of $1,022,000,000 

Have  yielded  a  revenue  of $575,000,000 

Articles  manufactured  ready  for  consumption,  valued  at 

$1,578,000,000 

Revenue 791 ,  500,000 

Articles  of  food  (al)out  four-fifths  sugar  and  molasses)  and 

live  animals,  valuation $1,430,000,000 

Revenue 725,000,000 

Total  revenue $2,091, 500,000 

So  far,  the  duties  upon  these  classes  may  be  justified 
under  the  necessity  for  a  revenue  from  customs,  provided 
they  are  rightly  adjusted. 

It  is  to  be  observed  that  a  very  considerable  part  of  the 
revenue  which  is  derived  from  the  import  of  textile  fab- 
rics is  yielded  by  articles  which  are  not  of  prime  necessity. 
It  is  secured  from  kinds  of  goods  that  depend  mainly 
upon  fashion  and  fancy  rather  than  upon  utility  for  their 

26 


II 


TAXATION  NOT  RECEIVED.  2/ 

sale  ;  these  taxes  may,  therefore,  do  no  injury  to  con- 
sumers even  if  for  a  time  or  even  permanently  continued 
at  high  rates  of  duty  for  revenue  only. 

In  the  same  period  of  twelve  years,  i88o  to  1891  inclu- 
sive, the  dutiable  imports  of  crude  materials,  which  are 
necessary  in  the  process  of  domestic  industry,  valued  at 
port  of  shipment, 

At $634,000,000 

Have  been  taxed. $182,000,000 

Materials  partly  manufactured  which  also  enter 
into  the  processes  of  domestic  industry 
valued  at $838,000,000 

$1,472,000,000 
Have  been  taxed 246,000,000 

Total  Tax $428,000,000 

This  annual  tax  of  about  $35,600,000  has  been  but  a 
small  part  of  the  excess  of  revenue  which  has  been  ex- 
pended in  the  rapid  payment  of  our  national  debt  by  the 
purchase  of  bonds  before  maturity  at  a  high  premium. 
This  reduction  of  debt  is  a  benefit,  and  may  be  set  down 
as  so  much  gain  to  the  people. 

The  evils  of  these  taxes  are,  however,  manifold  while 
the  actual  cost  of  their  collection  can  hardly  be  measured. 
These  evils  consist  in  the  following  relative  disabilities  or 
additional  charges  upon  consumers  of  sums  of  money 
which  the  people  pay  but  which  the  government  does 
not  receive. 

First. — In  the  maintenance  of  the  prices  of  some  of  the 
most  important  materials  which  are  consumed  in  domestic 
arts,  year  by  year,  above  the  prices  of  the  same  materials 
in  foreign  countries,  whatever  the  actual  prices  of  each 
year  may  be. 

Second. — In  depressing  the  prices  of  these  same  materi- 
als in  other  manufacturing  countries  by  the  obstruction  to 


28  TAXA  TION  AND    WORK. 

the  demand  of  this  country  which  possesses  the  greatest 
purchasing  power  of  any  nation  in  the  world. 

Third — In  diminishing  the  purchasing  power  of  other 
nations  in  respect  to  the  excess  of  our  farm  products,  thus 
reducing  the  demand  upon  us  and  depressing  the  price  of 
our  excess  which  is  necessarily  sold  for  export  upon  which 
the  price  of  our  whole  crop  depends. 

Fourth — In  rendering  it  necessary  to  grant  compensa- 
tory duties  on  the  import  of  manufactures  ready  for  con- 
sumption, in  order  to  overcome  in  part  the  evil  done  to 
domestic  manufacturers  by  the  enhanced  cost  of  their 
materials  in  consequence  of  this  bad  system  of  duties 
on  crude  materials. 

Fiftli — In  the  grave  injury  done  to  the  workmen  occu- 
pied in  the  special  production  of  ores,  pig-iron,  wool,  and 
other  crude  materials  by  the  uncertainty  of  their  occupa- 
tion, by  the  import  of  foreign  laborers  for  special  service 
and  in  many  other  ways.  Any  advantages  given  by  such 
duties  being  as  a  rule  wholly  secured  by  owners  rather 
than  by  workmen. 

It  is  of  course  impossible  to  measure  the  exact  burden 
of  the  taxes  which  the  people  pay  but  which  the  govern- 
ment does  not  receive.  The  imposition  of  these  taxes 
upon  imports  in  Class  B,  crude  materials,  and  in  Class  C, 
partly  manufactured  materials,  vastly  increases  the  burden 
of  taxation  while  yielding  a  revenue  which  is  insignificant 
in  amount. 

From  the  closest  computation  which  I  have  been  able 
to  make,  I  should  estimate  it  at  nearly  ten-fold  the  rev- 
enue derived  from  the  import — or  at  a  sum  exceeding 
$326,000,000  each  year — which  is  equivalent  to  doubling  the 
normal  cost  of  the  government  with  the  pensions  added. 

In  justification  of  this  estimate  I  will  give  a  few  ex- 
amples. 


TAXATION  NOT  RECEIVED.  29 

First. — In  respect  to  the  maintenance  of  the  prices  of  most 
important  crude  materials  above  those  in  other  countries. 
Since  1880  there  has  been  a  very  great  reduction  in  the 
cost  of  producing  iron  and  steel  in  this  and  all  other 
countries,  accompanied  by  a  very  great  reduction  in 
prices.  By  a  very  careful  computation  made  by  myself 
and  by  Mr.  David  A.  Wells,  the  disparity  in  the  cost  of 
pig-iron  only,  to  the  consumers  of  this  country  as  com- 
pared to  consumers  supplied  from  other  sources  in  other 
countries,  has  amounted  to  $70,00x3,000  a  year.  The 
workmen  in  mines  and  laborers  in  furnaces  have  received 
no  benefit  from  this  interference  ;  their  actual  earnings 
as  a  body  are  barely  sufificient  to  support  the  life  even  of 
the  imported  laborers  who  constitute  the  majority  of 
their  number.  There  are  a  few  exceptionally  high-priced 
men  in  nearly  every  establishment.  The  disparity  in  the 
price  of  the  higher  forms  of  iron  and  of  steel  as  compared 
to  the  lower  prices  in  Great  Britain  has  been  much  greater 
than  on  pig-iron.  The  evil  effect  of  this  tax  upon  coal, 
ores,  and  crude  iron  cannot  be  estimated  at  less  than 
$100,000,000  a  year,  which  is  a  handicap  on  all  iron  and 
steel  consumers. 

The  effect  of  duties  upon  ores,  coal,  and  crude  iron 
has  been  to  keep  the  average  price  of  pig-iron  several 
dollars  per  ton  above  the  price  in  other  countries,  varying 
year  by  year  with  the  urgency  of  the  demand. 

This  excess  of  price  has  been  in  some  years  more  than 
the  duty  in  such  years — being  accompanied  by  imports  in 
such  years.  In  some  years  the  excess  of  price  has  been 
less  than  the  duty — then  without  imports  except  of  some 
special  qualities — the  general  result  has  been  low  wages 
to  the  miners  and  furnace  workmen  as  a  body,  and  large 
profits  to  a  very  limited  number  of  iron  masters.  In  the 
census  year  just  reported,  the  iron  miners  of  Pennsylvania 


30  TAXATION  AND    WORK. 

secured  intermittent  work  b)'  which  they  earned  on  the 
average  $259  each  per  year  for  the  whole  year's  work. 

Scco)id. — The  effect  of  the  duty  upon  wool  has  been  very 
'different.  Wool  is  produced  by  very  many  flock  owners 
and  in  many  places  throughout  the  world  ;  there  is  no  such 
limit  of  numbers  as  that  which  affects  iron  mining,  and  no 
limit  to  a  few  places.  Hence,  when  the  imports  of  the 
wool  of  South  America  and  Australia  were  obstructed  by 
the  duty  imposed  in  the  original  wool  and  woollen  tariff 
of  1867,  the  precise  effect  followed  which  was  foretold  by 
the  opponents  of  that  measure.  The  prices  of  wool  in 
the  two  great  markets  of  London  and  Antwerp  were 
reduced  in  the  lack  of  our  demand — the  manufactures  of 
Europe  were  promoted  at  the  expense  of  our  own — the  cost 
of  foreign  worsted  and  woollen  goods  was  thereby  reduced 
while  our  manufacturers  being  deprived  of  a  proper  mix- 
ing of  wool,  were  limited  to  the  fabrics  to  which  American 
fleeces  are  adapted,  which  are  also  limited  in  variety. 
The  price  of  American  wool  was  lowered  and  yet  the 
manufacturer  was  not  protected.  Imports  of  wool,  and 
of  fabrics  at  the  artificially  lowered  prices,  but  at  very 
high  rates  of  duty,  increased.  These  conditions,  varying 
in  different  seasons,  have  continued  to  the  present  day. 
Thus  the  farmer  has  paid  the  cost  of  bad  legislation  by 
being  forced  to  take  a  lower  price  for  his  wool  and  also 
to  pay  a  higher  price  for  his  clothes.  How  much  this 
double  disadvantage  costs  in  money  cannot  be  even 
approximately  computed,  but  it  must  come  to  a  large 
sum  annually. 

The  disadvantages  under  which  we  exist  from  the  mis- 
direction of  our  taxes  are  mainly  confined  to  the  two 
classes  of  duties  treated  in  this  chapter,  i.  c,  the  taxes 
upon  crude  and  partly  manufactured  articles.  When 
these  are  removed,  the  manufactures  of  this  country  will 


TAXATION  NOT  RECEIVED.  3 1 

for  the  first  time  in  the  present  generation  be  enabled  to 
measure  their  own  power. 

As  I  have  stated,  I  cannot  compute  the  true  cost  of  the 
duties  which  have  yielded  an  annual  average  of  $35,600,- 

000  from  taxes  upon  articles  of  necessary  use  at  less  than 
tenfold,  or  more  than  the  entire  cost  of  the  government, 
including  pensions.     If    any   one  contests  this  estimate, 

1  shall  be  glad  to  know  on  what  grounds. 

Revenue  duties  on  the  other  classes  of  manufactured 
goods,  and  upon  articles  of  voluntary  use  as  well  as 
luxuries,  will  yield  increasing  revenues  with  the  greater 
abundance,  lower  prices,  and  consequent  increase  in  con- 
sumption. 

This  is  not  a  theory,  but  a  matter  of  observation  and 
experience. 


CHAPTER   VII. 
British  Tariff  Reform. 

A  VERY  common  but  utterly  erroneous  idea  prevails  in 
this  country  that  Great  Britain  only  gave  up  the  system 
technically  called  Protection  when  by  means  of  this 
system  she  had  attained  conditions  of  great  prosperity 
and  a  substantially  commanding  position  in  manufactures 
and  commerce. 

The  very  reverse  is  true ;  the  protective  system  was 
given  up  by  Great  Britain  under  the  pressure  of  pauper- 
ism and  bankruptcy,  in  which  it  culminated  in  the  years 
immediately  preceding  1842,  when  Sir  Robert  Peel  pre- 
sented and  carried  his  first  great  measure  for  the  reform  of 
the  British  tariff. 

The  origin  of  customs  in  England  was  in  the  time  of 
Edward  I. ;  thenceforward,  duties  were  added  and  multi- 
plied, each  rate  being  devoted  to  a  specific  purpose,  until  in 
1847  as  many  as  fifteen  separate  duties  were  levied  upon 
the  same  article.  In  1787,  William  Pitt  carried  through  an 
act  for  consolidation  without  reducingthe  number  of  articles 
taxed  ;  this  measure  left  twelve  hundred  articles  subject  to 
duty,  and  in  order  to  bring  the  act  into  force  three  thou- 
sand resolutions  were  required  in  the  House  of  Commons. 
In  1797,  however,  the  laws  relating  to  customs  filled  six 
large  folio  volumes,  unprovided  with  an  index.  The 
great  subsequent  wars  rendered  nugatory  all  Pitt's  efforts 
to  relieve  commerce  ;  between  1797  and  181 5 — six  hundred 


BRITISH   TARIFF  REFORM.  33 

additional  acts  were  passed,  and  in  fifty-three  years  of 
the  reign  of  George  III.  the  total  number  of  acts  relating 
to  imports  was  thirteen  hundred.  At  length  taxes 
became  so  numerous  that  nothing  was  left  untaxed  ; 
even  premiums  offered  for  the  suggestion  of  fresh 
subjects  of  taxation  failed   to   stimulate   invention. 

Another  consolidation  was  begun  which  required 
twenty-five  years  for  its  completion.  Then  a  third  was 
undertaken  under  the  direction  of  Mr.  James  Deacon 
Hume,  and  finally  a  fourth,  which  was  enacted  in  1833. 
All,  however,  worked  changes  in  form  rather  than  in  sub- 
stance, except  that  in  1824,  under  the  lead  of  Huskisson, 
several  of  the  crude  materials  necessary  to  British  indus- 
try had  been  put  into  the  free  list,  of  which  the  most 
important  was  wool.  This  change  had  worked  great 
benefit  to  both  wool  grower  and  manufacturer  ;  the  price 
of  domestic  wool  advanced,  while  the  manufacturer  was 
enabled  to  reduce  the  cost  of  goods  through  the  oppor- 
tunity given  him  by  freedom  from  taxation  on  imported 
wool  to  buy,  sort,  and  mix  his  wool  in  the  most  effective 
manner. 

The  first  decisive  step  in  tariff  reform  was  brought 
about  in  1840  by  the  appointment  of  a  Parliamentary 
Committee  at  the  instance  of  Mr.  Joseph  Hume.  The 
condition  of  the  country  was  then  desperate.  The  most 
concise  account  of  the  case  is  given  in  Noble's  Fiscal 
Legislation  of  Great  Britain,  but  all  authorities — Liberal 
and  Tory  alike — are  substantially  at  an  agreement  upon 
this  point.  It  is  written  that  "  every  interest  in  the 
country  was  alike  depressed — in  the  manufacturing  dis- 
tricts mills  and  workshops  were  closed  and  property  daily 
depreciated  in  value  ;  in  the  seaports,  shipping  was  laid  up 
useless  in  harbor ;  agricultural  laborers  were  eking  out  a 
miserable  existence  upon  starvation  wages  and  parochial 


34  TAXATION  AND    WORK. 

relief;  the  revenue  was  insufficient  to  meet  the  national 
expenditure  ;  the  country  was  brought  to  the  verge  of 
national  and  universal  bankruptcy. 

"  The  protective  system  which  was  supported  with 
a  view  to  rendering  the  country  independent  of 
foreign  sources  of  supply,  and  thus,  it  was  hoped,  foster- 
ing the  growth  of  a  home  trade,  had  most  effectually 
destroyed  that  trade,  by  reducing  the  entire  population 
to  beggary,  destitution,  and  want.  The  masses  of  the 
population  were  unable  to  secure  food,  and  had  conse- 
quently nothing  to  spend  upon  British  manufactures." 

In  dealing  with  the  tariff,  Hume's  committee  classified 
imports  and  the  revenue  derived  therefrom  under  four 
titles,  according  to  the  use  to  which  each  subject  of  taxa- 
tion might  be  put,  and  under  each  title  the  imports  were 
classified  again,  according  to  the  amount  of  revenue 
which  was  derived  from  each  article.  This  table  at  once 
disclosed  two  facts,  first,  that  a  large  part  of  the  burden 
of  taxation  rested  either  upon  necessary  articles  of  food 
or  else  upon  articles  which  were  necessary  component 
materials  in  British  industry.  Second,  that  the  greatest 
number  of  specific  articles  taxed  yielded  a  very  small  part 
of  the  revenue — more  than  half  yielding  such  insignificant 
sums  as  not  to  pay  the  cost  of  collection.  It  was  the 
logic  of  this  table  that  led  Sir  Robert  Peel  to  change  his 
convictions  in  regard  to  the  tarifT  policy  and  upon  it  his 
measures  of  reform  were  framed. 

In  1885  the  writer  ventured  to  call  the  attention  of 
Hon.  Hugh  McCulloch,  then  Secretary  of  the  Treasury, 
to  the  bad  form  of  our  tarifT  acts,  coupled  with  a  corre- 
sponding bad  form  in  the  customary  annual  statements  of 
imports  and  of  the  revenue  derived  therefrom. 

In  accordance  with  the  writer's  suggestions,  the  Secre- 
tary gave  instructions  for  the  adoption   of  the  existing 


BRITISH   TARIFF  REFORM.  35 

classification  and  of  the  present  forms  of  statement.  Sub- 
sequently, under  instructions  from  Secretary  Manning,  the 
annual  accounts  from  1880  inclusive  were  classified  under 
the  same  forms,  so  that  upon  a  single  page  of  the  annual 
report  of  imports  entered  for  consumption  which  is  issued 
by  the  Bureau  of  Statistics  of  the  Treasury  Department, 
one  may  compute  at  a  glance  the  relative  burden  of  taxa- 
tion upon  all  classes  of  imports. 

Some  of  the  conclusions  which  are  developed  by  the  logic 
of  these  tables  have  already  been  given  in  this  treatise. 

At  the  very  time  when  the  protective  system  culmin- 
ated in  the  desperate  conditions  of  Great  Britain  in  1840, 
it  will  be  observed  that  it  was  at  the  end  of  a  period  of 
profound  peace  which  had  lasted  over  twenty-five  years, 
in  which  the  personal  wealth  of  the  upper  classes  in 
Great  Britain  had  become  immense.  When  presenting 
his  first  measure  of  the  tariff  reform  Sir  Robert  Peel 
remarked,  after  stating  the  deficit  and  the  financial  diffi- 
culties to  be  met  :  "  You  will  bear  in  mind  that  this 
is  no  casual  and  occasional  difficulty.  You  will  bear  in 
mind  that  there  are  indications  among  all  the  upper 
classes  of  society  of  increased  comfort  and  enjoyment ; 
of  increased  prosperity  and  wealth  :  and  that  concurrently 
with  these  indications  there  exists  a  mighty  evil  which  has 
been  growing  up  for  the  last  seven  years  and  which  you 
are  now  called  upon  to  meet."  This  evil  was  the  increas- 
ing poverty  and  destitution  of  the  great  mass  of  the 
working  people.  The  remedy  was  sought  in  a  re-distribu- 
tion of  the  burden  of  taxation.  The  tariff  then  covered 
1,200  separate  subjects  of  taxation,  of  which  seventeen 
yielded  ninety-four  per  cent,  of  the  revenue;  the  rest  were 
petty  obstructions  to  commerce  imposed  for  the  purpose 
of  "  protection  with  incidental  revenue."  That  purpose 
was  not,  however,  avowed  in  these  exact  terms  at  that 


36  TAXA  TJON  AND    WORK. 

time  as  it  has  lately  been  in  this  country  by  the  advo- 
cates of  McKinleyism. 

In  the  first  measure  Sir  Robert  Peel  wholly  abated  or 
reduced  the  duty  upon  a  consistent  plan  on  750  articles, 
and  also  caused  an  income  tax  of  seven  pence  in  the 
pound  to  be  put  upon  classified  incomes,  which  is  a  frac- 
tion less  than  three  per  cent.;  all  incomes  below  ;^I50 
being  exempt.  From  this  income  tax  he  anticipated  a 
revenue  of  ^^3, 770,000  in  the  first  year.  It  yielded 
;i^5, 100,000,  conclusively  proving  that  under  the  previous 
system,  while  the  poor  had  been  rapidly  reduced  to  pau- 
perism, the  rich  had  become  richer. 

Like  causes  produce  like  effects.  Under  the  pretext  of 
protection  to  the  miners  of  this  country,  and  especially 
Pennsylvania,  a  duty  has  long  been  maintained  upon  the 
import  of  foreign  iron  ores  ;  it  is  now  seventy-five  cents 
a  ton,  which  is  precisely  equal  to  the  labor  cost  of  produ- 
cing a  ton  of  iron  ore  in  Pennsylvania, — according  to  the 
sworn  statements  of  the  iron  masters  of  Pennsylvania,  by 
whom  its  iron  mines  are  worked.  The  result  of  this  system 
in  the  last  census  year, — a  year  of  the  greatest  activity 
ever  known — was  that  4,410  iron  miners  and  workmen 
secured  an  income  of  $259  each,  amounting  in  all  to 
$1,141,239.  There  are  iron  masters  in  the  state  of  Penn- 
sylvania, whose  single  incomes  in  a  single  year  have  ex- 
ceeded the  whole  sum  earned  by  the  protected  iron  miners. 

Where  is  the  leader  who  will  do  what  Sir  Robert  Peel 
did  for  England  ?  Who  is  the  legislator  who  will  give  up 
the  errors  of  a  life-time  in  the  face  of  the  logic  of  such 
facts  and  lead  his  political  supporters  to  a  conclusion 
which  will  give  him  a  right  to  use  the  same  words  which 
Sir  Robert  Peel  uttered,  when  he  left  ofBce  in  1847,  after 
having  carried  the  repeal  of  the  Corn  Laws  ? 

"  I  shall  leave  a  name  sometimes  remembered  with  ex- 


bRTTISH    TARIFF  REFORM.  37 

pressions  of  good  will  in  the  abodes  of  those  whose  lot  it 
is  to  labor  and  to  earn  their  daily  bread  by  the  sweat  of 
their  brow,  when  they  shall  recruit  their  exhausted 
strength  with  abundant  and  untaxed  food,  the  sweeter 
because  it  is  no  longer  leavened  by  a  sense  of  injustice." 

The  effect  of  the  first  measure  of  tariff  reform  in  Great 
Britain — that  of  1842 — was  not  immediately  perceptible, 
the  evil  effect  of  the  previous  conditions  being  very 
deep-seated  ;  but  before  1845  the  beneficial  influence  upon 
every  branch  of  industry,  agriculture,  manufactures,  and 
commerce  alike,  had  become  so  manifest  that  little  oppo- 
sition was  met  to  Peel's  second  great  act  of  tariff  reform 
of  1845,  by  which  four  hundred  and  thirty  articles,  con- 
sisting of  the  crude  and  partly-manufactured  materials 
which  entered  into  the  processes  of  domestic  industry 
were  put  into  the  free  list  ;  the  duties  on  the  lessening 
number  of  dutiable  imports  being  at  the  same  time 
reduced  and  adjusted  to  these  new  conditions.  In  1846 
the  Irish  famine  forced  the  abatement  of  all  taxes  upon 
food  by  orders  in  council,  subsequently  followed  by  the 
repeal  of  the  Corn  Laws. 

In  1847  Sir  Robert  Peel  left  office,  but  the  immense 
benefits  to  every  branch  of  British  industry  rendered  it  a 
comparatively  easy  matter  to  bring  the  tariff  substantially 
to  its  present  condition  in  1853,  coupled  with  a  repeal  of 
the  Navigation  Laws  under  the  lead  of  Mr.  Gladstone. 
Since  that  date  the  people  of  the  United  States  have  been 
forbidden  by  their  own  acts  to  compete  with  Great  Britain 
in  the  construction  and  use  of  ocean  steamships,  while  the 
commercial  flag  of  Great  Britain  dominates  every  sea  un- 
der the  beneficent  influence  of  freedom  from  all  restrictions, 
and  by  virtue  of  the  protection  which  is  given  by  exemp- 
tion from  taxation  on  all  the  materials  used  in  the  construc- 
tion and  in  the  subsistence  of  the  vessels. 


80427 


38  TAXATION  AND    WORK. 

In  the  speech  of  1842  in  which  Sir  Robert  Peel  surren- 
dered the  conviction  of  a  life-time  of  active  political  influ- 
ence when  introducing  a  reform  of  the  whole  fiscal  system 
of  Great  Britain,  he  laid  down  the  principle  of  which  he  had 
framed  that  measure  in  this  memorable  declaration  : 

"  If  we  had  to  deal  with  a  new  society,  in  which  those  infinite  and  com- 
plicated interests  which  grow  up  under  institutions  like  those  in  the  midst  of 
which  we  live,  had  found  no  existence,  the  true  abstract  principle  would  be 
'  to  buy  in  the  cheapest  market  and  to  sell  in  the  dearest.*  And  yet  it  is  quite 
clear  that  it  would  be  utterly  impossible  to  apply  that  principle  in  a  state  of 
society,  such  as  that  in  which  we  live,  without  a  due  consideration  of  the  in- 
terests which  have  grown  up  under  the  protection  of  former  laws. 

"  While  contending  for  the  justice  of  the  abstract  principle,  we  may  at 
the  same  time  admit  the  necessity  of  applying  it  partially.  I  think  the 
proper  object  is  first  to  lay  the  foundation  of  good  laws,  to  provide  the  way 
for  gradual  improvement  which  may  thus  be  introduced  without  giving  a 
shock  to  existing  interests.  If  you  do  give  a  shock  to  those  interests,  you 
create  prejudice  against  the  principles  themselves  and  only  aggravate  the 
distress.  This  is  the  principle  on  which  we  attempted  to  proceed  in  the 
preparation  of  the  tariff. " 

This  principle  was  justified  by  events — the  most  earnest 
opponents  at  the  beginning  became  the  most  urgent  sup- 
porters of  the  reform  before  its  completion,  giving  Mr. 
Gladstone  the  reason  for  saying  when  reviewing  these 
measures  :  "  The  road  to  Free  Trade  is  like  the  road  to  vir- 
tue— the  first  steps  the  most  painful,  the  last  the  most 
profitable."     (I  quote  from  memory.) 

It  would  be  difficult  to  state  the  rule  upon  which  tariff 
reform  should  be  conducted  in  this  country  in  any  plainer 
or  simpler  terms. 


CHAPTER   VIII. 

Beggarly    Compensation    of    United    States 
Officials. 

A  FEW  words  may  now  be  rightly  given  to  some  of  the 
subjects  of  our  national  expenditure  and  some  directions 
in  which  our  appropriations  should  be  increased. 

No  other  country  denies  to  its  principal  executive 
ofificers  a  salary  which  should  be  adequate  to  sustain  their 
position  with  dignity.  No  man  in  this  country  who 
might  not  well  be  ashamed  of  the  miserable  compensation 
of  the  judicial  officers  of  the  national  courts,  although  the 
salaries  of  some  of  the  judges  of  the  lower  courts  were 
slightly  raised  by  the  last  Congress.  No  one  who  gives 
any  attention  to  the  matter  but  would  try  to  devise  some 
method  for  relieving  members  of  Congress  from  being  the 
errand  boys  of  their  districts,  by  giving  them  at  the  public 
cost  the  assistance  of  such  secretaries  and  stenographers 
as  they  might  require.  No  business  man  but  would 
advocate  such  payment  to  senators  as  would  relieve  those 
who  have  not  a  fortune  from  the  necessity  of  practising 
law  in  the  minor  courts  during  the  recesses  of  Congress, 
or  from  being  in  part  supported  by  their  business  or  law 
partners  while  in  the  public  service. 

Finally,  no  one  who  has  become  as  well  informed  as  the 
writer  in  regard  to  the  excellence  and  thoroughness  of  the 
work  of  many  of  the  subordinate  officers  in  the  depart- 
ments would  deny  them  a  rate  of  compensation  equal  to 

39 


40  TAXATION  AND    WORK. 

that  of  a  second-class  bookkeeper  in  a  merchant's  count- 
ing-room. 

A  small  part  of  the  money  annually  spent  on  remote 
improvements  which  have  little  true  claim,  would  suffice 
to  meet  these  requirements.  The  money  proposed  to  be 
given  to  a  few  hundred  sugar-planters  as  a  bounty  would 
cover  a  suitable  increase  to  the  niggardly  standard  of  the 
present  compensation  of  our  judges  and  other  public 
officers  many  times  over. 

I  think  the  public  has  no  conception  of  the  meanness 
of  the  compensation  of  its  principal  officers  and  other 
public  servants.  I  have  before  me  a  list  of  the  chief 
officials  and  their  assistants  of  the  United  States,  num- 
bering sixty-four  persons  :  the  Vice-President  and  eight 
Cabinet  officers,  $8,ooo  a  year  each ;  nine  Supreme 
Court  judges,  $io,ooo  each,  with  a  petty  Jionorariuvi 
of  $500  in  addition  to  the  Chief  Justice;  ten  Circuit 
Court  judges,  $6,000  each,  $60,000  ;  one  Solicitor-Gen- 
eral, $7,000 ;  the  Treasurer  of  the  United  States,  who 
is  responsible  for  the  custody  and  safe  keeping  of  an 
income  of  over  $1,000,000  a  day  or  more,  $6,000;  thirty 
men  whose  entire  payment  is  $235,500 — less  than  $8,000 
a  year  each. 

There  is  not  a  lawyer  capable  of  filling  their  place  on 
the  bench,  and  there  is  not  an  official  connected  with  any 
considerable  railroad,  bank,  insurance  company,  or  other 
similar  corporation,  who  would  not  be  called  upon  to 
make  a  very  large  pecuniary  sacrifice  if  named  for  any 
one  of  these  places.  It  would  not  be  difficult  to  name 
less  than  ten  men,  in  business  life,  each  of  whom  is  in 
charge  of  affairs  of  vastly  less  importance,  measured  by 
the  mere  work  to  be  done  than  our  government  officers, 
whose  united  salaries  would  exceed  the  payment  of  the 
thirty  principal  officers  of  the  United  States,  omitting  the 


BEGGARLY  COMPENSATION  OF   U.    S.    OFFICIALS.     4 1 

President.  I  think  I  could  name  six  men  whose  salaries 
exceed  the  thirty  designated  officials. 

Passing  to  the  grade  below,  we  find  Assistant  Secretaries, 
the  Comptroller  of  the  Currency  and  his  assistant,  the 
Auditors  of  the  Treasury,  the  Registrar,  the  Cashier,  and 
other  men  holding  offices  of  the  utmost  importance  in  the 
conduct  of  the  vast  affairs  of  the  United  States,  number- 
ing thirty-four,  whose  aggregate  salaries  come  to  $144,800 
— a  trifle  over  $4,000  each  ;  each  one  less  than  the  salary  of 
a  first-class  bookkeeper  in  any  great  bank,  insurance  com- 
pany, or  commercial  establishment.  It  is  difficult  to 
express  the  sense  of  the  utter  unfitness  and  unsuitability 
of  these  payments. 

The  total  payment  of  the  sixty-four  chief  officials  of 
the  United  States  and  their  principal  assistants  is 
$381,300. 

The  salaries  of  the  subordinates  in  the  many  depart- 
ments of  this  government  are  in  their  wretched  proportion 
corresponding  to  these  payments  made  to  the  principal 
officers. 

To  one  who  knows  anything — vo  any  one  who  has  even 
a  very  slight  knowledge  of  the  enormous  volume  of  care- 
ful accounting  and  of  thorough  work  which  of  necessity 
must  be  done  in  the  conduct  of  the  service  of  this  nation, 
the  only  wonder  is  that  without  any  true  order  of  merit 
in  the  Civil  Service,  without  any  assurance  of  a  tenure  of 
office  during  efficient  and  honest  service,  and  without  any 
suitable  provision  for  old  age,  men  can  be  found  who 
will  bury  themselves  in  these  departments  and  do  the 
work  of  which  every  merchant  can  have  some  conception 
when  reading  the  condensed  statement  or  account  current 
of  the  United  States  with  the  Tax  Payers  which  has  been 
given  in  this  treatise.  It  would  be  well  if  every  one  who 
holds   any   responsible   position   in    business  life   would 


42  TAXATION  AND    WORK, 

give  attention  to  this  matter  and  picture  for  himself  the 
amount  of  work  which  must  have  been  done  in  order  to 
enable  the  writer  to  condense  a  complete  analysis  of  the 
affairs  of  a  nation  so  as  to  give  it  in  a  single  column  of  a 
newspaper  or  on  two  pages  of  a  magazine.  (Sec  Forum, 
Sept.,  1 891.)  The  reform  in  the  Civil  Service  will  not  be 
fully  accomplished  until  this  wrong  is  righted  by  making 
an  appropriation  for  the  increased  compensation  of  the 
judicial  and  executive  officers  of  this  government. 

Avery  small  part  of  the  annual  increase  in  the  revenue 
derived  from  liquors  and  tobacco  only  would  suffice  for 
the  purpose. 

Having  thus  dealt  with  the  present  burden  of  taxation 
in  this  country,  we  may  rightly  consider  some  of  the 
elements  of  comparative  taxation  which  will  indicate  the 
transcendent  position  that  we  may  assume  when  our  own 
taxes  are  rightly  adjusted. 

We  should  never  lose  sight  of  the  fact  that  our  conti- 
nental system  of  Free  Trade  among  the  several  States  of 
the  Union  saves  us  from  the  necessity  of  any  army  except 
for  service  as  a  border  police.  If  our  army  were  equal  in 
magnitude  to  the  average  of  the  armies  of  the  European 
States  at  the  present  time,  the  number  of  men  in  the 
prime  of  life  who  would  be  taken  from  productive  work 
would  be  somewhere  between  six  hundred  and  eight 
hundred  thousand.  Each  one  of  these  w^orse  than  idle 
men  would  consume  the  product  of  about  one  other  per- 
son, while  the  time  taken  for  camp  duty  and  drill  by 
men  in  the  reserves  would  again  deplete  the  product. 
Therefore  our  relative  burden,  measured  in  terms  of 
work,  is  not  over  one-third  that  of  European  countries. 
Where  it  now  requires  the  year's  work  of  about  eight 
hundred  thousand  men  to  support  our  government,  in- 
cluding our  small  army  and  navy  as  they  now  are,  if  we 


BEGGARLY  COMPENSATION   OF    U.    S.    OFFICIALS.     43 

kept  1123  an  armed  force  equal  in  proportion  to  the  men 
in  active  service  in  the  armies  and  navies  of  Europe,  it 
would  require  six  to  eight  hundred  thousand  soldiers 
in  addition ;  and  as  it  requires  about  one  other  man's 
product  at  the  meagre  result  per  man  in  most  European 
countries  to  support  one  soldier,  that  would  add  six  to 
eight  hundred  thousand  more.  The  mere  measure  in 
money  of  the  war  tax  of  about  one  thousand  million  dol- 
lars which  is  now  impoverishing  Europe  is  but  a  slight 
indication  of  the  true  burden  of  the  passive  war  which 
is  miscalled  peace.  The  actual  European  war  tax,  when 
computed  in  terms  of  work,  is  the  correlative  of  thrice 
the  whole  work  which  we  now  devote  to  the  entire  sup- 
port of  our  government,  including  pensions. 

There  are  twenty-three  million  people  occupied  for 
gain  in  this  country  at  the  present  time — men,  women, 
and  young  persons,  of  whom  perhaps  eighteen  million 
are  men,  many  of  them  beyond  arms-bearing  age.  The 
proportion  of  men  in  this  country  of  arms-bearing  age  at 
the  present  time  does  not  exceed  fourteen  million,  of 
whom  only  about  thirty  thousand  are  taken  away  from 
productive  work  for  occupation  in  the  army  or  in  the 
navy.  Let  it  be  assumed  that  our  armed  forces  were 
increased  to  seven  hundred  thousand  in  active  service  in 
preparation  for  war  and  seven  hundred  thousand  more 
supporting  this  force ;  that  would  come  to  ten  per  cent. 
of  the  workmen  of  the  country  who  are  of  arms-bearing 
age>  and  would  then  become  only  equal  to  the  European 
war  tax. 

Even  this  country  could  hardly  bear  such  a  strain. 
What  must  be  the  necessary  effect  of  such  a  burden  upon 
countries  like  Germany,  Austria,  and  Italy,  where  the 
capacity  or  the  productive  energy  of  soil  and  labor  com- 
bined  under  present  conditions,  is  not  one-half  that  of 


44  TAXATTOM  AND    IVOR  A'. 

this  country,  with  corresponding  wages  at  one-third  to 
two-thirds  our  rates?  No  wonder  that  the  people  in 
many  parts  of  Germany  are  almost  unfit  to  work,  and  are 
incapable  of  the  maximum  of  production  ;  no  wonder 
that  a  loathsome  disease  called  \.\\c  pellagra,  which  is  due 
to  insufificient  food,  has  devastated  some  parts  of  Italy, — 
the  price  that  poor  Italy  pays  for  freedom  from  despot- 
ism !     No  wonder  that  Russia  is  famine-stricken. 

But  light  is  breaking :  witness  the  recent  treaty  of  reci- 
procity in  trade  between  Austria  and  Italy — hereditary 
enemies, — Germany,  Switzerland,  Belgium,  and  other 
countries,  through  which  treaty  for  mutual  service  perhaps 
a  considerable  portion  of  their  forces  may  be  disarmed. 

One  who  can  read  what  is  written  between  the  lines  of 
these  figures  which  relate  to  armies  may  comprehend  the 
advantage  which  this  countrj'  might  have  over  other 
countries,  if  we  do  not  pervert  our  system  of  taxation  so 
as  to  diminish  our  great  advantage  in  productive  power. 

Light  as  our  burden  of  taxation  relatively  is,  it  is  so 
badly  adjusted  that  its  burden  is  much  greater  than  can 
be  indicated  either  by  a  statement  in  dollars  or  in  days* 
work. 

What  one  can  readily  see  in  the  figures  and  the  facts 
may,  however,  disclose  what  one  does  not  see  so  plainly. 


CHAPTER  IX. 
What  Is  Protection? 

"  What  is  Protection  ?  "  "  In  what  does  the  true 
Protection  to  Domestic  Industry  consist  ?  "  This  ques- 
tion may  have  a  strange  sound  ;  yet  there  never  was  a 
time  in  the  history  of  this  country  when  a  definite  answer 
was  more  needed,  the  confusion  among  the  advocates  of 
the  poHcy  which  has  been  heretofore  known  as  that  of 
"  Protection  to  Domestic  Industry  "  being  now  greater 
than  among  any  other  class  of  people.  The  system  for- 
merly called  Protection  varies  very  much  from  the  policy 
which  is  now  advocated  under  that  name,  which  should 
rather  be  called  McKinleyism. 

In  dealing  with  this  subject  certain  propositions  may 
serve  as  a  true  guide. 

First.  In  selecting  the  subjects  upon  which  duties  are 
to  be  placed  in  framing  a  tariff  bill,  such  discrimination 
should  be  used  as  will  most  fully  protect  American  labor 
from  injury. 

Second.  In  the  preparation  of  measures  for  collecting 
duties  upon  imports,  such  discrimination  should  be  used 
as  will  most  fully  promote  domestic  manufactures,  mining, 
and  mechanic  arts. 

Third.  In  framing  measures  for  collecting  duties  on  im- 
ports, such  discrimination  should  be  used  as  will  most  readily 
and  fully  develop  a  home  market  for  domestic  products  to 
the  utmost  either  for  export  or  for  home  consumption. 

45 


4^  TAXATION  AND    WORK. 

Fourth.  It  is  not  expedient  or  even  lawful  to  impose 
duties  upon  imports  without  such  discrimination  in  the 
choice  of  the  subjects  of  taxation  as  may  conduce  most 
fully  to  the  public  interest. 

Fifth.  In  devising  a  just  method  of  framing  a  tariff,  if 
any  separation  can  be  made  in  respect  to  the  relations  of 
capital  and  of  labor,  the  interest  of  the  workmen  should 
be  first  considered. 

Sixth.  The  public  revenues  derived  from  taxation  either 
by  way  of  an  excise  on  domestic  liquors  and  tobacco  or 
by  way  of  duties  on  imports  should  be  strictly  limited  to 
the  necessary  expenses  of  the  government  when  economi- 
cally administered. 

Seventh.  An  excess  of  revenue  which  cannot  be  imme- 
diately applied  to  the  payment  of  debt  is  a  constant 
source  of  danger  and  is  likely  to  promote  either  a  waste 
or  misapplication  of  the  money  derived  by  taxation  from 
the  hardly  earned  products  of  the  people. 

Eighth.  All  taxes  that  the  people  pay,  the  government 
should  receive,  and  no  money  should  be  diverted  from 
public  use  to  purposes  of  private  gain  either  directly  or 
ifidirectly. 

Ninth.  It  is  neither  just  nor  expedient  to  frame  a  tariff 
for  the  purpose  of  raising  or  maintaining  the  price  of  any 
given  article  of  domestic  manufacture  abovc'what  it  would 
otherwise  be,  since  that  purpose  can  only  be  accomplished 
for  the  benefit  of  the  few  at  the  cost  of  the  many. 

Tenth.  It  is  neither  just  nor  expedient  to  put  a  tax  or 
duty  upon  any  crude  or  partly  manufactured  product  that 
is  of  foreign  origin  but  which  is  necessary  in  the  processes 
of  domestic  industry,  since  such  a  tax  will  burden  and 
obstruct  the  work  of  very  large  numbers  of  persons  even 
if  the  private  interest  of  a  lesser  number  may  be  for  a 
time  promoted. 


1 


WHAT  IS  PROTECTION  ?  47 

The  former  policy  which  preceded  McKinleyism  has 
been  justified  by  its  advocates  by  imputing  its  origin  in 
this  country  to  Alexander  Hamilton.  It  is  true  that 
Hamilton  called  attention  to  the  incidental  stimulus 
which  might  be  given  to  some  branches  of  domestic 
manufacture  already  existing,  through  the  imposition  of 
a  tariff  imposed  for  the  main  purpose  of  collecting  revenue 
from  duties  upon  a  few  finished  articles  commonly  called 
manufactures;  but  this  was  the  incident  of  Hamilton's 
revenue  tariff  and  not  the  main  object.  Hamilton's  tariff 
was  limited  to  a  small  number  of  taxed  articles  ;  the  average 
rate  upon  dutiable  imports  was  less  than  ten  per  cent. ' 
Crude  materials  were  left  substantially  untaxed.  A  few 
minor  changes  had  been  made  in  Hamilton's  tariff  down 
to  the  embargo  which  preceded  the  war  of  1812.  That 
war  and  the  previous  embargo  changed  the  conditions 
materially,  giving  a  very  unwholesome  stimulus  to  cer- 
tain branches  of  industry  at  the  cost  of  many  others  ;  those 
over-stimulated  branches  clamored  to  be  upheld  and 
sustained  by  increasing  duties.' 

A  short  time  after  the  war  of  18 12  the  first  formidi-  le 
and  influential  movement  towards  raising  the  duties  for  ;  lie 
direct  promotion  of  certain  specific  branches  of  indu<lry 
was  mooted.  The  discussion  took  a  very  wide  scope  ;  the 
change  was  resisted,  especially  in  New  England,  under  the 
popular  cry  of  "  Free  Trade  and  Sailors'  Rights."  In 
1820,  Daniel  Webster  made  one  of  the  greatest  speeches 
which  he  ever  uttered,  at  a  meeting  in  Faneuil  Hall,  which 
was  called  by  the  merchants  of  Boston  to  oppose  these 
measures.    Abbott  Lawrence  and  Nathan  Appleton,  who 

'  In  Hamilton's  tariffs  of  1789  and  1792,  spirits,  wines,  spices,  tea,  coffee, 
and  a  few  other  articles  were  subjected  to  duties  purely  for  revenue  which 
were  above  the  ad-valorem  rates  on  manufactures.  The  protective  duties 
were  all  ad-valorem^  and  did  not  average  ten  per  cent. 


48  TAXATION  AND    WORK. 

afterward  became  the  most  conspicuous  champions  of  the 
high-tariff  policy,  were  among  the  prominent  men  present 
and  taking  an  active  part  in  this  meeting.  In  1 824,  Webster 
opposed  the  protective  policy  in  the  Senate  in  debate  with 
Henry  Clay,  who  had  attempted  to  give  it  the  name  of 
"  The  American  System."  Webster  pointed  out  that  it  was 
not  an  American  system  at  all,  but  that  it  was  a  system 
which  had  been  long  in  force  in  foreign  countries,  notably 
in  Great  Britain.  He  called  attention  to  the  fact  that  the 
United  States  were  proposing  to  take  this  system  up  at 
the  very  time  when  its  adverse  influence  on  Great  Britain 
had  become  apparent  and  when  measures  were  pending 
under  the  lead  of  Huskisson  for  a  change  in  the  policy. 
But  the  advocates  of  a  high  tariff  in  the  United  States 
had  their  way,  passing  various  acts  culminating  in  the 
tariff  of  1842,  which  was  enacted  in  the  United  States 
in  the  very  year  that  the  great  reform  of  the  tariff  in 
England  was  instituted  under  the  leadership  of  Sir 
Robert  Peel  in  the  direction  of  what  has  since  been 
c^l^ed  British  Free  Trade. 

It  is  to  be  remarked  that  the  lowest  prices  of  cotton 
ever  known  were  reached  between  1842  and  1846,  during 
th  .  imposition  of  this  high  tariff  ;  the  lowest  prices  since 
thctt  date  are  now  prevailing  under  the  McKinley  act. 
Yet  there  are  1,000,000,000  non-machine-using  people 
in  the  ^vorld  who  are  craving  for  more  and  better  cotton 
fabrics;  but  they  can  only  pay  for  them  in  wool,  dye- 
woods,  ores,  or  other  similar  crude  materials,  which  we 
tax  in  order  to  keep  them  out. 

Either  one  of  the  tariffs  of  Hamilton  and  those  enacted 
subsequently,  including  even  the  tariff  of  1842,  would  now 
be  denounced  by  the  supporters  of  McKinleyism  as 
pestilent  efforts  of  the  enemies  of  domestic  industry  to 
establish  British  Free  Trade. 


WHAT  IS  PROTECTION?  49 

Webster  afterward  sustained  the  policy  which  was 
forced  upon  the  country  in  1824,  but  he  never  attempted 
to  refute  his  own  arguments  on  which  he  had  opposed  its 
introduction.  In  his  latter  years  he  merely  claimed  that 
the  government  was  bound  to  sustain  those  branches  of 
industry  which  had  been  stimulated  by  the  tariff,  since  it 
had  elected  at  the  outset  to  turn  the  power  of  taxation 
against  the  mechanic  arts,  agriculture,  and  commerce,  in 
which  his  constituents  had  been  previously  engaged,  and 
had  encouraged  them  to  establish  the  factory  system,  of 
which  he  became  later  a  mere  advocate. 

The  only  ground  on  which  any  of  these  measures,  prior 
to  the  tariff  of  1861,  were  supported  was  this,  that  the  full 
occupation,  the  quick  demand  for  labor,  and  high  rate  of 
wages  which  prevailed  in  this  country,  not  only  in  agri- 
culture and  in  the  mechanic  arts,  but  also  in  all  the 
branches  of  domestic  manufacture  which  cannot  be  con- 
ducted in  any  other  country,  for  the  supply  of  this  country 
(constituting  by  far  the  greater  part  of  our  distinctive 
manufacturing  arts)  had  rendered  the  special  development 
of  the  iron  industry  and  of  the  textile  manufacture  some- 
what difficult  and  uncertain. 

It  is  singular  to  observe  how  the  special  representatives 
of  pig-iron,  wool,  and  silver  have  gradually  assumed  the 
control  and  direction  of  the  legislation  of  this  country.  If 
regard  be  given  to  their  relative  importance,  the  comparison 
may  be  made  in  more  than  one  way ;  perhaps  the  surest  way 
is  to  compare  them  with  the  products  of  the  barn-yard. 

Pig-iron  in  1890  perhaps  reached  a  total  value  at  the  furnace 

of  about $130,000,000 

Wool,   about   60,000,000 

Silver,  nominally  $70,000,000,  in  fact,  about. 50,000,000 

Total $240,000,000 

Poultry  and  eggs,  at  the  lowest  computation,  may  be  put  at. .     $250,000,000 

4 


50  TAXATIOX  AND    WORK. 

The  eggs  only,  at  the  standard  of  consumption  in  the 
factory  boarding-houses  of  Massachusetts  and  of  the  iron 
and  steel  workers  of  Pennsylvania,  came  to  between 
$i25,ocxD,ooo  and  $150,000,000.  According  to  assessors' 
returns  in  Ohio  the  &^^  product  is  worth  more  than  the 
wool  of  Ohio. 

The  production  of  pig-iron,  wool,  and  silver  is  relatively 
an  insignificant  factor  in  our  body  politic  ;  it  is  their 
abundant  consumption  that  is  important.  Iron  and  silver 
give  occupation  to  a  very  small  fraction  of  the  popula- 
tion, who  are  occupied  in  mining  at  very  low  rates  of 
wages  and  under  very  adverse  conditions  of  life,  the 
benefit,  if  any,  accruing  almost  Avholly  to  the  owners  of 
the  capital  which  is  invested  in  the  mines. 

The  proceeds  of  the  sales  of  poultry  and  eggs,  on  the 
other  hand,  are  distributed  throughout  the  country  ;  very 
little  goes  to  capital,  the  payments  being  made  almost 
wholly  to  those  who  require  it  more  than  any  other  class, 
because  they  possess  so  little  capital. 

REVERTING   TO    HISTORIC   PARALLELS. 

In  1824  the  efTort  was  still  being  made  in  Europe  as  it 
had  long  been  in  Great  Britain  to  prevent  the  distribution 
of  information  and  the  knowledge  of  inventions  in  manu- 
facturing. It  had  been  a  penal  offence  in  the  early  part 
of  the  century,  prior  to  1824,  and  even  I  believe  up  to 
1842,  to  take  drawings  or  examples  of  many  kinds  of  ma- 
chinery out  of  Great  Britain.  True,  the  iron  industry  and 
the  textile  manufacture  already  existed  in  this  country  in 
very  considerable  development  and,  as  Hamilton  in  1791 
and  Webster  in  1820  proved,  on  a  very  solid  basis,  having 
become  established  as  infant  manufactures  during  the 
colonial  period  in  spite  of  the  efforts  of  Great  Britain  to 
suppress  them  ;  but  it  was  held  that  they  required  a  cer- 


WHAT  IS  PROTECTION-?  $1 

tain  so-called  "  reasonable  measure  of  Protection  "  by  way 
of  duties  on  foreign  imports  of  fabrics  of  like  kinds,  in 
order  to  offset  the  lower  wages  which  prevailed  in  other 
countries  ;  it  being  then  erroneously  assumed  that  the 
cost  of  labor  per  unit  of  product  might  be  measured  or 
established  by  reference  to  the  rates  of  wages.  That  error 
in  regard  to  the  relation  of  rates  of  wages  to  the  cost  of 
labor  still  prevails. 

There  has  been  much  discussion  about  promoting 
diversity  of  occupation  or  employment  under  a  protective 
tariff.  A  very  slight  investigation  proves  that  the  effect 
of  a  protective  tariff,  so  far  as  it  is  operative,  has  been 
rather  to  restrict  than  to  promote  diversity  of  employ- 
ment. 

All  the  more  conspicuous  and  important  arts  in  whose 
behalf  it  has  been  mainly  advocated  were  well  established 
in  the  United  States  long  before  Hamilton's  tariff,  even  in 
the  colonies  before  the  Revolution.  The  cotton  industry 
came  later,  even  before  the  invention  of  the  cotton  gin  in 
this  country,  an  invention  which  would  naturally  have  led 
to  the  establishment  of  spinning  and  weaving  here  whether 
there  had  been  any  Protection  or  not.  Hamilton  himself 
advocated  a  remission  of  the  duty  of  three  cents  a  pound 
upon  cotton  in  1791,  in  order  to  promote  the  more  rapid 
development  of  the  cotton  manufacture  in  this  country 
where  it  was  already  established. 

No  art  of  any  conspicuous  importance,  requiring  skill, 
aptitude,  and  intelligence  in  their  application  to  machinery, 
has  yet  been  established  in  this  country  merely  as  a  result 
of  the  adoption  of  a  high  tariff.  It  is  possible  that  there 
are  some  minor  branches  of  industry  of  which  the  corre- 
sponding import  has  been  cut  off  by  almost  prohibitive 
duties  which  may  have  been  brought  here  in  consequence ; 
but  no  distinct  branch  of  manufacturing  of  any  relative 


52  TAXATION  AND    WORK. 

or  considerable  importance  has  ever  been  added  to  the 
occupations  before  existing  here,  under  any  tariff  impos- 
ing high  rates  of  duty. 

There  is  a  natural  diversity  of  occupation  which  estab- 
lishes itself.  Its  course  may  be  traced  throughout  this 
country  itself,  in  which  we  have  the  widest  application  of 
absolute  Free  Trade  among  the  largest  number  of  persons 
who  were  ever  permitted  to  enjoy  the  privilege.  It  will 
be  observed  that  the  more  free  the  conditions,  the  more 
fully  each  section  adapts  itself  to  its  own  work  ;  but 
nevertheless  in  every  State  there  exists  a  certain  ratio  of 
occupations,  more  manufacturing  in  the  East,  more  agri- 
culture in  the  West  and  South. 


CHAPTER  X. 

Occupations  that  cannot  be  Protected  by  Duties 
ON  Imports. 

The  occupations  of  the  people  of  this  country  were 
listed  in  the  United  States  census  of  1880  under  four 
general  titles  : 

isi — Professional  and  Personal  Service. 

Males 2,712,943 

Females 1,361,295 

■ • 4,074,238 

2d —  Trade  and  Transportation. 

Males. , 1,750,892 

Females , , 59, 364 

1,810,256 

Zd — Agriculture. 

Males 7,075,983 

Females 594,510 

7,670,493 

4M — Manufacturing — Mechanic  Arts  and  Mining. 

Males 3,205,124 

Females .....,.,, 631,988 

3,837,112 

Total 17,392,099 

This  was  the  force  occupied  for  gain,  from  whose  work 
the  product  of  the  support  of  a  population  of  50,155,783 
was  derived  in  the  census  year  covered  by  the  census  of 
1880. 

A  very  slight  consideration  of  the  relative  numbers  in 
each  class  of  occupations  of  the  people  of  the  different 
sections  of  this  country  will  show  that  diversity  estab- 
lishes  itself   in    the   surest    manner,    the  more    free    the 

53 


54  TAXATION  AND    WORK. 

conditions  of  exclianc:^c.  The  very  rapid  growth  of  manu- 
factures and  niinin;^-  in  the  Southern  States  since  the 
protective  system  of  slavery  was  removed,  gives  the  most 
conckisive  proof  that  all  the  manufacturing,  mining,  and 
mechanic  arts  develop  and  grow  under  a  system  of  free 
exchange,  according  to  the  natural  conditions  and  diversi- 
ties of  each  part  of  the  country,  and  that  the  less  the 
artificial  stimulus  given  to  them  the  more  sure  and  safe 
their  foundations  may  be. 

It  has  gradually  become  apparent,  with  the  development 
of  science  and  invention,  that  the  rate  of  wages  is  not  a 
sure  standard  of  the  cost  of  labor.  It  is  found  that  rates 
of  wages  may  be  very  low,  yet  the  cost  of  labor  in  the 
unit  of  product  may  be  very  high  ;  while  conversely  it  is 
in  fact  an  established  rule  that  in  countries  of  great  pro- 
ductive capacity  where  machinery  has  been  applied  in 
largest  measure,  as  it  has  been  in  the  United  States,  the 
general  rates  of  wages  which  are  derived  from  the  sale  of 
our  products  are  very  high,  while  the  general  cost  of  our 
production  in  each  unit  of  product  is  very  low.  This 
rule  applies  to  every  art  for  which  the  conditions  are 
most  favorable,  and  which  is  not  a  mere  handicraft. 
It  is  not  yet  a  universal  rule  because  its  application 
has  been  altered  by  the  long  continuance  of  a  high 
tariff,  the  effect  of  which  has  been  to  depress  prices 
and  wages  in  some  arts  in  foreign  countries  by  obstruct- 
ing the  demand  of  this  country  which  has  the  greatest 
consuming  power  of  any  one  in  the  world, — while  to 
some  extent  making  wages  variable  and  uncertain  with- 
out permanently  raising  them  in  this  country  in  the  arts 
of  like  kind.  It  is  therefore  impossible  to  adjust  duties 
on  imports  by  rates  of  wages,  on  the  theory  that  by  so 
doing  the  cost  of  labor  may  be  equalized.  In  nine-tenths 
of  our  work  our  cost  of  labor  is  the  lowest  in  the  world  as 


OCCUPATIONS   THAT  CANNOT  BE  PROTECTED.        55 

our  rates  of  wages  are  about  the  highest,  therefore  the 
last  thing  we  should  seek  is  to  equahze  the  rates  of  wages. 
We  must  maintain  our  high  rates  of  wages  in  order  to 
secure  our  low  cost  of  labor,  so  that  under  Free  Trade  while 
all  nations  profit,  yet  we  m.ay  rightly  profit  most  on  the 
exchange  of  products  and  services. 

In  respect  to  Professional  and  Personal  Service  and  to 
Trade  and  Transportation  there  can,  of  course,  be  no 
foreign  competition  and  therefore  no  need  of  tariff  Pro- 
tection, unless  the  logic  of  that  system  may  be  held  to 
require  an  import  duty  upon  immigrants. 

In  the  products  of  Agriculture  this  country  so  far 
excels  all  others  in  its  huge  abundance  produced  at 
high  relative  wages  and  low  relative  cost,  that  since 
sugar  was  put  upon  free  list  the  articles  which  could  be 
imported  from  a  foreign  country  that  are  also  produced 
by  ourselves  would  represent  less  than  three  per  cent,  of 
our  total  product. 

Lastly,  in  dealing  with  the  Manufactures,  Mechanic 
Arts,  and  Mining  industries,  in  which  3,837,112  persons 
were  occupied  in  1880,  it  is  difficult  to  set  apart  in  a  dis- 
criminating list  over  1,000,000  whose  product  is  such  that 
one  of  like  kind  could  be  imported  even  if  there  were  no 
duty  upon  imports. 

To  what  extent  our  finished  manufactures  would  be 
subject  to  foreign  competition  cannot  be  fully  determined 
until  the  component  materials  which  are  of  foreign  origin 
are  as  free  from  taxation  as  those  of  our  competitors  in 
Great  Britain,  Belgium,  Germany,  and  France. 

If  we  apply  this  method  of  discrimination,  for  instance, 
to  the  State  of  Pennsylvania,  we  may  remark  that  tobacco 
and  wool  are  the  only  products  of  agriculture  which  could 
be  imported,  giving  occupation  to  a  small  part  of  a  force 
which  numbered 


5^  TAXATION  AND    WORK. 

In  1880,  in  Agriculture 301,112 

In  Professional  and  Personal  Service,  free  of  foreign  competition.       446,713 

In  Trade  and  Transportation 1791963 

In  Manufactures,  Mechanics,  and  Mining,  the  number  of  bakers, 
blacksmiths,  brick  and  stone  masons,  butchers,  cabinet 
makers,  carriage  builders,  coopers,  lumbermen,  painters, 
plumbers,  wheelwrights,  and  all  others  of  like  kind  who  can- 
not be  subject  to  foreign  competition  was 357.584 

Total  exempt  from  foreign  competition 1,285,372 

Subject  in  part  to  foreign  competition: 

The  total  number  occupied  in  textile  factories — mines,  iron  and 
steel  works,  paper  mills  and  the  like  that  are  subject  to  for- 
eign competition,  or  of  whose  product  a  part  might  be  im- 
ported,  numbered 1 70. 693 

Total  number  occupied  for  gain  in  Pennsylvania  in  1880 1,456,365 

Thus  it  appears  that,  even  in  Pennsylvania,  less  than 
twelve  per  cent,  of  the  people  Avho  did  the  work  could,  in 
1880,  be  subjected  in  part  to  an  import  of  a  product  of 
like  kind.  How  can  we  protect  the  eighty-eight  per 
cent.  ? 

If  the  same  method  of  analysis  be  applied  to  the  occu- 
pations of  the  people  of  Ohio,  of  whom 

40  per  cent,  were  occupied  in  Agriculture. 

25  per  cent,  in  Professional  and  Personal  service. 

loj  per  cent,  in  Trade  and  Transportation. 

24^  per  cent,  in  Manufactures,  Mechanic  Arts,  and  Mining. 

100 

(the  divisions  in  Ohio  very  closely  corresponding  to  the 
average  of  the  whole  country),  we  find  that  even  in- 
cluding wool,  iron,  and  every  other  branch  of  industry 
subject  to  a  possible  import,  yet  out  of  994,475  who 
were  occupied  for  gain,  it  is  impossible  to  set  apart 
50,000  who  could  under  any  conceivable  circumstances 
or  conditions  be  subjected  to  an  import  of  a  product  of 
like  kind  from  any  other  country,  setting  aside  Canada — 
the  sales  of  the  products  of  agriculture  to  Canada  being 
greater  than  the  purchases. 


CHAPTER  XI. 
Method  of  Tariff  Reform. 

In  dealing  with  the  remedy  for  the  evils  of  taxation 
under  which  we  now  suffer  and  which  inflict  privation  un- 
der the  pretext  of  Protection  I  shall  be  obliged  to  recur  to 
some  of  the  views  which  have  been  presented  in  earlier 
numbers  and  to  repeat  in  some  slight  measure  some  of  my 
previous  statements. 

Thus  far  the  people  of  this  country  have  been  able  to 
bear  the  vagaries  of  a  system  of  taxation  imposed  under 
acts  which  have  been  devised  without  order,  method,  or 
any  really  scientific  consideration  of  any  definite  policy  of 
any  kind.  The  tariff  has  of  late  been  treated  as  the  mere 
football  of  politics  :  the  McKinley  bill  supported  as  a  party 
measure  by  those  who  considered  its  provisions  wholly 
unfit  to  be  adopted,  without  any  just  consideration  of  the 
true  interests  of  consumers.  In  spite  of  these  constant 
variations  and  uncertainties,  such  have  been  the  effects  of 
science  and  invention  applied  in  the  field,  the  forest,  and 
the  factory  that  the  progress  of  this  country  in  material 
welfare  during  the  last  twenty-five  years  has  been  greater 
than  anything  ever  known  here  or  elsewhere. 

Viewed  from  a  scientific  standpoint,  however,  the  very 
ability  of  this  country  to  bear  the  perversion  of  taxation 
has  been  almost  a  misfortune.  But  the  end  has  come. 
The  people  have  long  listened  with  patience  to  every  shal- 
low and  sophistical  argument  that  could  be  put  before 
them,  without  giving  time  or  attention  to  the  matter,  but 

57 


58  TAXATION  AND   WOKK. 

the  necessary  end  has  at  length  been  reached  in  a  very  sin- 
gular way,  to  wit:  through  thci'cry  excess  of  our  abundance. 
We  are  now  "  smothered  in  our  own  grease  ";  we  are  bur- 
dened with  our  own  excess  of  products  as  compared  to  our 
own  consumption.  Under  these  conditions  people  have  at 
last  become  tired,  and  in  the  vernacular  they  are  now  crying 
out :  "  Give  us  a  rest."  From  every  side  and  from  every 
department  of  industry  comes  up  the  word :  "  We  have 
asked  you  for  bread,  and  you  have  given  us  a  stone. 
You  promised  us  greater  activity ;  we  are  subject  to  de- 
pression. You  held  out  the  expectation  of  better  prices 
for  our  farm  products,  especially  for  our  wool  and  our  cot- 
ton, and  you  have  brought  about  conditions  in  which  we 
are  being  forced  to  take  less  for  many  products  that  we 
have  to  sell  and  to  pay  more  for  much  that  we  have  to 
buy.  We  will  not  submit  to  these  quack  methods  of  legis- 
lation any  longer.  Only  a  partial  famine  in  Europe 
has  for  the  time  saved  us." 

This  change  in  public  opinion  is  coming  about  without 
any  distinct  process  of  reasoning,  but  rather  through  a 
gradual  development  of  common-sense  and  conviction  on 
the  part  of  the  great  mass  of  the  people  that  a  paternal 
policy  may  no  longer  be  tolerated,  of  which  the  logical 
outcome  is  the  perversion  of  public  taxation  to  private 
benefit,  accompanied  by  a  corresponding  organization  of 
labor  with  the  declared  purpose  of  defending  itself  against 
capital,  as  if  capital  were  its  enemy.  Another  outcome 
of  this  "  paternalism  "  has  been  the  demand  of  the  Farm- 
ers' Alliance  for  the  aid  and  support  of  the  government  in 
speculating  in  grain  and  cotton  by  the  lending  of  fiat 
money  at  two  per  cent,  per  annum. 

These  fallacies,  of  course,  affect  and  mislead  only  a  small 
fraction  of  discontented  persons.  The  solid  common-sense 
of  the  people  pronounces  them  to  be  fallacious,  and  by 


METHOD    OF    TARIFF  REFORM.  59 

instinct  rather  than  reason  traces  these  fallacies  to  their 
source  in  the  undertaking  of  Congress  to  regulate  prices 
and  wages  and  to  control  enterprises  by  constant  inter- 
ference with  the  freely  chosen  pursuits  of  the  people. 

The  McKinley  tariff,  so-called,  is  being  rapidly  con- 
demned, not  because  the  evils  which  are  affecting  the 
community  can  be  directly  traced  to  its  provisions,  but 
because  of  an  utter  distrust  of  the  whole  method  on  which 
it  has  been  framed,  which  distrust  has  been  derived  from 
its  general  effect.  With  this  change  of  opinion  in  regard 
to  the  measure  itself  has  also  come  a  conclusion  in  regard 
to  the  leaders  who  sustained  it,  whose  sincerity  is  only 
justified  in  inverse  proportion  to  the  estimate  put  upon 
their  intellectual  capacity.  This  statement  is  not  made  in 
a  controversial  way.  Is  it  not  a  fact  that  such  is  the  aspect 
to  which  the  slow,  sure,  but  solid  common-sense  of  the 
mass  of  the  people  has  been  brought  ?  Is  not  this  a  true 
view  of  the  present  status  ? 

If  such  is  the  fact,  then  there  may  now  be  very  great 
danger  of  injudicious  methods  in  changing  the  policy  of 
the  country.  Unless  a  plain  and  intelligent  direction  can 
be  given  to  the  reform  of  our  revenue  system  by  the  concur- 
rent action  of  reasonable  men  without  distinction  of  par- 
ties, the  reform  may  be  worked  by  methods  which  may 
cause  injury  in  proportion  to  the  want  of  intelligence  with 
which  the  new  measures  are  framed,  and  for  lack  of  right 
discrimination  and  true  protection  to  our  own  people. 

I  have  already  stated  that  it  would  be  as  injudicious  to 
destroy  capital  and  to  break  up  branches  of  industry  which 
have  been  almost  forced  by  a  high  tariff  to  take  the  direc- 
tion in  which  they  are  found,  as  it  was  in  the  beginning 
to  force  them  into  such  artificial  conditions.  In  order  that 
the  necessary  changes  in  taxation  may  be  rightly  directed, 
two  measures  will  have  become  a  positive  necessity;  first, 


&)  TAXATION  AND   WORK. 

a  careful  estimate  of  the  annual  expenditure  for  pensions, 
of  the  duration  of  that  obligation,  and  of  its  progressive 
reduction  until  the  last  dollar  shall  have  been  paid  ;  second, 
a  judicious  selection  of  subjects  of  taxation  by  well  devised 
measures,  which  shall  be  computed  so  as  to  meet  this  ob- 
ligation without  yielding  any  undue  excess  of  revenue. 
That  will  be  the  most  difficult  part  of  the  undertaking, 
and  this  work  ought  to  be  entered  upon  without  regard  to 
party  politics. 


CHAPTER   XII. 
Protection  by  Exemption  from  Taxation. 

All  advocates  of  Protection  through  duties  upon  im- 
ports down  to  the  advent  of  McKinleyism  have  supported 
that  system  as  a  temporary  poHcy  in  preparation  for  Free 
Trade. 

The  only  distinction  between  the  intelHgent  members 
of  the  Republican  and  Democratic  parties  is  now  in  respect 
to  the  time  and  method  of  beginning  a  reform  of  the 
tariff. 

In  beginning  to  deal  with  these  measures,  attention  may 
well  be  given  to  two  other  fundamental  propositions  pre- 
viously submitted  :  First,  in  view  of  the  fact  that  measures 
of  taxation  may  interfere  greatly  with  the  progress  of 
industry,  such  discrimination  should  be  used  in  framing 
these  measures  as  will  most  effectually  proinote  domestic  in- 
dustry in  all  its  brandies.  Second,  since  the  protection  of 
American  labor  is  bound  by  indissoluble  tics  to  the  protection 
of  domestic  industry,  every  measure  of  taxation  should  be 
so  framed  as  to  protect  the  American  xvorkman  in  the  most 
effective  manner. 

Dealing  with  the  matter  from  this  point  of  view,  all 
taxes  upon  necessary  articles  of  food  must,  of  course,  be 
done  away  with  because  food  is  the  most  essential  element 
of  human  power  ;  fuel  may  be  included  in  almost  the  same 
category. 

It  is  manifest  that  no  tax  can  be  imposed  upon  the  im- 
port of  food  without  increasing  the  cost  of  that  food  to 

6i 


62  TAXATION  AND    IVOR  A". 

the  consumer.  Such  taxes  inflict  privation  under  the 
semblance  of  protection.  The  tax  may  happen  to  be  a 
very  necessary  article  of  food.  We  may  take  potatoes  as 
an  example,  as  they  are  now  subject  to  a  tax  on  imports 
of  twenty-five  cents  per  bushel.  Potatoes  are  only  im- 
ported for  common  use  in  years  of  scarcity  and  of  short 
crops  in  this  country.  In  other  years  the  import  consists 
merely  in  the  early  spring  luxuries  from  Bermuda  and 
elsewhere.  WHien  there  is  a  short  crop  in  New  England, 
New  York,  and  along  the  sea-coast,  the  prices  of  necessity 
rise  to  a  very  high  point,  because  potatoes  will  not  bear  a 
very  long  haul  by  railway.  Then  the  tax  oppresses  the 
poorest  in  the  community  in  greatest  measure.  It  is  then 
that  this  tax  becomes  malignant.  It  adds  nothing  to  the 
income  of  the  farmer,  while  it  oppresses  the  poor.  In  one 
year,  not  long  since,  this  tax  added  a  million  and  a  quarter 
dollars  to  the  unnecessary  surplus  revenue  of  the  people 
of  the  United  States  and  this  burden  fell  mainly  upon 
the  poorer  classes  in  the  northeastern  part  of  the  country. 

The  same  reasoning  applies  to  every  kind  of  food  which 
is  of  necessary  use.  Sugar  has  lately  been  added  to  the 
free  list.  This  will  be  to  the  great  advantage  of  con- 
sumers, and  when  hereafter  the  tax  is  taken  from  tin-plates 
this  abatement  of  the  tax  on  sugar  will  also  become  of 
great  advantage  to  the  farmers  and  canners  of  fruit,  of 
preserved  milk,  and  other  agricultural  products,  in  which 
sugar  and  tin-plates  are  the  component  materials  of  chief 
cost. 

By  the  same  rule  any  tax  which  is  imposed  on  the  crude 
or  partly  manufactured  materials  of  foreign  origin  which 
are  necessary  in  the  processes  of  our  domestic  industry, 
becomes  a  most  serious  obstruction  to  the  development 
of  domestic  industry  and  indirectly  a  most  serious  obstruc- 
tion   to    the    progress    of   the    farmer.      It    burdens   the 


PROTECTION  B  Y  EXEMPTION  FROM  TAX  A  TION.     63 

domestic  manufacturer,  restricting  his  power  of  purchase, 
while  it  cuts  off  the  farmer  from  one  of  his  principal  out- 
lets for  the  excess  of  his  crops  by  export.  Such  a  tax  very 
often  works  to  the  greatest  injury  of  the  producers  of  the 
specific  crude  material  which  it  had  been  intended  to 
benefit.  We  may  again  take  domestic  wool  as  an  example 
of  such  grave  injury.  When  it  was  first  proposed  to  adopt 
the  so-called  "wool  and  woollen  tariff,"  of  which  the  present 
measure  is  but  an  aggravated  continuation,  the  most  skil- 
ful and  competent  of  the  woollen  manufacturers  under  the 
lead  of  the  late  Edward  Harris,  of  Woonsocket,  presented 
arguments  to  the  Committee  of  Ways  and  Means  against 
the  duty  on  wool,  upon  the  distinct  ground  that  such  a 
tax,  while  it  would  seriously  injure  the  domestic  manufac- 
tures of  woollen  or  worsted  goods,  making  it  necessary  to 
advance  the  cost  of  the  fabric  and  also  the  price  of  cloth- 
ing, would  also  depress  the  price  of  domestic  wool,  gravely 
injuring  the  farmer.  Such  has  been  its  exact  effect. 
What  was  predicted  twenty-five  years  ago  has  been  verified 
to  the  letter. 

This  subject  has  been  dealt  with  many  times,  and  as 
often  as  the  prices  of  wool  have  been  set  off  against  the 
varying  rates  of  the  tariffs  since  that  of  1824,  in  which 
wool  was  first  made  subject  to  duty,  it  has  been  made  very 
plain  that  while  the  prices  of  wool  have  varied  from  other 
causes,  yet  so  far  as  the  tariff  appears  to  have  had  any 
effect  at  all,  the  high  tariffs  after  one  or  two  years  of  ad- 
justment have  caused  domestic  wool  to  become  very  much 
lower  in  price  ;  while  on  theother  hand,  within  a  year  or  two 
after  low  tariffs  had  been  enacted  the  prices  of  domestic 
wool  have  always  advanced.  These  changes  have  been 
fully  explained  both  by  the  advocates  of  protection  to  the 
woollen  manufacture  and  by  the  advocates  of  freer  trade. 
In  order  that  the  manufacture   of  woollen  and  worsted 


64 


TAXATION  AND    WORK. 


goods  may  prosper,  manufacturers  must  have  the  same 
free  access  to  all  the  varieties  of  wool  in  the  world  as  that 
enjoyed  by  their  competitors,  especially  the  manufacturers 
of  Great  Britain.  Otherwise  the  whole  balance  of  the 
industry  is  broken  up. 

When  duties  are  high  an  undue  proportion  of  woollen 
machinery  is  put  upon  the  few  varieties  of  fabric  that  can 
be  wholly  made  of  domestic  wool.  This  branch  of  work 
is  soon  overdone,  the  price  of  the  fabric  goes  down  and 
the  price  of  domestic  wool  goes  with  it.  On  the  other 
hand,  the  representatives  of  other  branches  of  the  woollen 
industry  which  are  obstructed  by  the  duties  on  foreign 
wool  are  obliged  to  advance  the  prices  of  their  goods  in 
order  to  cover  the  additional  cost  ;  clothing  as  a  whole 
costs  more,  while  the  farmer  gets  less  for  his  wool  than  he 
ever  did  before.  The  same  process  of  reasoning,  varied 
according  to  the  conditions  in  each  case,  can  be  applied 
to  all  other  crude  materials. 

In  respect  to  partly  manufactured  materials  such  as 
sheet  and  rolled  iron,  iron  bars,  tin-plates,  and  the  like,  it 
will  be  observed  that  while  through  invention  and  dis- 
covery there  has  been  a  very  steady  and  consecutive 
reduction  in  the  cost  and  thereafter  in  the  price,  these 
inventions  have  been  of  equal  effect  in  other  countries, 
and  the  prices  of  metal  in  other  countries,  especially  in 
Great  Britain,  have  been  reduced  in  even  greater  measure 
than  they  have  in  this  country.  The  effect  of  this  has 
already  been  stated.  Dealing  with  pig-iron  only,  we  find 
that  the  price  of  this  crude  material,  of  which  we  are  the 
largest  consumers  in  the  world,  for  ten  years,  to  our  ship- 
builders, machinists,  railway  constructors,  manufacturers 
of  agricultural  tools,  and  all  other  artisans  who  work  in 
metal,  has  been  on  the  average  $70,000,000  a  year  more 
than  the  price  of  the  same  quantity  and  the  same  quality 


PROTECTION'  BY  EXEMPTION  FROM  TAX  A  TION.     65 

delivered  in  Great  Britain  to  the  artisans  and  machinists 
in  her  own  works  and  in  those  of  other  countries.  We 
have  paid  in  ten  years  $700,000,000  in  the  additional  cost 
of  pig-iron,  and  yet  the  incompetent  among  the  pig-iron 
men  still  cry  for  higher  protection. 

Again,  taking  as  example  the  single  article  of  tin-plates  : 
The  competition  in  Wales  has  steadily  reduced  the  cost  of 
this  important  material,  of  which  we  are  also  the  greatest 
consumers  in  the  world.  The  tax  which  has  been  paid 
by  the  consumers  of  tin-plates  in  this  country  for  the  last 
ten  years  up  to  1891  inclusive  has  amounted  to  over 
$60,000,000.  With  singular  fatuity  the  advocates  of 
McKinleyism  are  now  endeavoring  to  promote  the  transfer 
of  the  production  of  tin-plates  from  Wales  to  this  country 
by  so  advancing  the  prices  as  to  enable  persons  who  have 
not  heretofore  proved  themselves  to  be  competent,  to 
undertake  this  somewhat  objectionable  branch  of  industry 
at  the  cost  of  the  consumers  of  this  country.  This  art  is 
in  many  respects  a  very  loathsome  and  undesirable  branch 
of  industry,  for  which  there  is  now  no  supply  of  laborers 
in  this  country.  All  the  work,  except  the  mere  rolling  of 
the  plates  of  iron  or  steel,  is  done  under  such  offensive 
conditions  as  to  make  it  one  of  the  kinds  of  work  about 
which  Daniel  Webster  long  since  said  that  "we  cannot 
afford  to  do  for  ourselves  what  foreign  paupers  can  do  so 
well  for  us."  The  people  who  do  this  work  in  Wales  are 
not  paupers, — they  are  fairly  well  paid,  but  the  conditions 
of  the  work  are  such  that  those  who  do  it  might  become 
a  very  undesirable  element  in  our  population.  Until  the 
offensive  and  unwholesome  parts  of  the  work  of  dipping 
plates  of  metal  into  oil  and  acid  and  then  in  melted  tin 
are  removed  by  invention,  it  is  the  greatest  folly  to  at- 
tempt to  transfer  this  branch  of  work  from  any  other 
country  to  this  country.     Moreover  this  change  w^ould 


66  TAXATION'  AiYD   WORK. 

cut  off  from  Great  Britain  her  present  means  of  paying 
to  the  extent  of  about  $30,000,000  a  year,  which  is  now 
applied  to  the  purchase  of  our  wiieat  and  our  cotton. 
Great  Britain,  rich  as  she  is,  cannot  buy  what  she  needs 
from  us  and  pay  for  it  only  in  gold.  Commerce  must  of 
necessity  consist  in  an  exchange  of  products.  A  transfer 
of  the  art  of  making  tin-plates  would  bring  over  to  this 
country  a  few  thousand  somewhat  objectionable  people 
who  would  become  consumers  in  very  small  measure  of  our 
wheat  and  of  our  cotton,  while  the  means  of  payment  of 
Great  Britain  would  be  diminished  to  the  extent  of  the 
value  of  the  tin-plates  which  she  pays  back  to  us  for  the 
products  of  our  farms  at  the  rate  of  nearly  $30,000,000  a 
year.  This  $30,000,000  annually  received  by  Great 
Britain  is  now  spent  by  her  for  our  cotton,  wheat,  and 
provisions.  If  we  deprive  her  of  the  means  of  payment 
to  that  extent — the  tin-plate  makers  moved  over  here 
would  become  consumers  in  limited  measure  of  the  same 
articles.  These  goods  require  a  large  amount  of  capital 
and  but  a  moderate  amountof  labor  of  a  rather  low  grade, 
hence  we  should  lose  more  than  we  should  gain,  even  if 
success  were  attained  in  establishing  this  art,  which  does 
not,  however,  seem  probable.  We  have  no  working 
people  to  spare  for  such  work. 

The  worst  effect  of  this  kind  of  interference  with  this 
course  of  trade  is  often  to  be  found  in  the  mere  obstruc- 
tion to  exports,  which  of  necessity  ensues  from  the  cutting 
off  of  imports.  Its  effect  in  this  country  is  the  more 
malignant  because  the  export  of  the  excess  of  our  prod- 
ucts of  agriculture  is  one  of  the  main  elements  in  our 
continued  prosperity.  The  proportion  of  the  products  of 
our  farms  exported,  except  cotton,  may  be  small,  but  every 
one  who  is  conversant  with  trade  at  all  is  well  aware  that  an 
excess  of  even  five  per  cent,  of  any  given  product  may  for 


PRO  TECTIOiV  B  Y  EXEMP  TION  FROM  TAX  A  TION.    6/ 

the  time  reduce  the  price  in  fivefold  measure,  and  this  is 
the  matter  of  main  importance  to  us.  At  this  present 
moment  the  effect  of  a  moderate  supply  of  cotton  has 
put  the  price  at  the  lowest  point  ever  reached  but  once 
before.  We  export  more  than  ten  per  cent,  of  the  aggre- 
gate of  our  farm  products  ;  in  some  years  our  exports 
have  amounted  to  nearly  twenty  per  cent,  of  the  whole 
product, computed  at  farm  values.  It  is  upon  the  sale  for 
export  of  this  excess  that  the  price  of  the  whole  crop  of 
everything  depends.  Consequently  an  obstruction  to 
imports,  of  small  apparent  importance  in  itself,  may  exert 
an  adverse  influence  on  prices  of  farm  products  which  are 
exported  and  therefore  on  the  whole  product,  in  a  meas- 
ure which  one  can  hardly  comprehend  except  for  the 
depression  that  has  ensued. 

It  therefore  follows  that  the  promotion  of  domestic 
industry,  both  in  agriculture  as  well  as  in  manufacturing, 
rests  upon  the  free  import  of  all  articles  of  food  and  of 
crude  or  partly  manufactured  materials  which  are  neces- 
sary to  the  processes  of  domestic  industry,  and  upon  the 
correspondingly  free  export  of  our  great  crops  and  of 
many  kinds  of  manufactured  goods  in  which  we  already 
excel  all  nations.  It  is  manifest  that  if  we  were  permit- 
ted to  secure  wool,  iron,  copper,  and  other  crude  materials 
which  are  necessary  in  the  processes  of  our  domestic  in- 
dustry on  the  same  terms  with  our  foreign  competitors, 
we  should  increase  our  markets  in  other  countries  in  very 
great  measure.  We  are  even  deprived  of  the  free  use  of 
our  own  copper  in  competition  with  others,  because  the 
producers  sometimes  sell  our  surplus  of  copper  to  foreign 
consumers  at  a  less  price  than  is  charged  to  our  own. 

When  this  country  fully  believes  in  itself, — when  it  no 
longer  subjects  its  own  imagination  to  the  humiliating 
idea  that  a  free,  intelligent,  well  paid,  and  fully  nourished 


68  TAXATION  AND   WORK. 

people  cannot  compete  with  the  underfed  pauper  laborers 
of  Europe,  we  shall  be  enabled  to  take  our  true  place 
among  the  nations.  We  shall  then  be  far  on  the  way 
toward  the  ultimate  abatement  of  every  national  tax  of 
every  kind  upon  every  import,  except  the  taxes  which  we 
may  put  upon  liquors  and  tobacco  in  order  to  support 
our  government.  When  that  condition  is  attained  the 
true  Protection  to  domestic  industry  will  be  established. 
It  will  then  consist  in  Free  Men,  Free  Soil,  Free  Speech, 
and  Free  Trade. 


CHAPTER  XIII. 
Free  Trade  the  Objective  Point. 

The  purpose  of  the  writer  in  the  preparation  of  this 
series  of  treatises  has  been  to  present  the  whole  subject 
of  national  taxation  in  a  reasonable  and,  to  some  extent, 
judicial  manner,  wholly  free  from  party  bias.  This  method 
of  dealing  with  the  subject  has  manifestly  become  a 
necessity,  for  the  reason  that  as  political  parties  are  now 
divided,  neither  one  has  as  yet  been  able  to  present  a 
thoroughly  complete  and  well  digested  measure  of  general 
tariff  reduction.  In  each  party  there  are  underneath  the 
surface  great  differences  of  opinion.  In  the  Democratic 
party  there  are  as  yet  relatively  few  men  who  are  yet  pre- 
pared to  take  the  wholly  independent  position  which  was 
assumed  by  Mr.  Mills,  Mr.  Carlisle,  the  Messrs.  Breckin- 
ridge, Mr.  McMillin,  and  Mr.  Wilson  in  framing  what  was 
known  as  the  Mills  Tariff  Bill,  Their  first  step  was  to 
put  wool,  hemp,  flax,  and  other  fibres  into  the  free  list, 
these  being  typical  and  somewhat  important  products  of 
the  particular  States  which  these  gentlemen  themselves 
represented.  They  did  not  frame  the  measure  known  as 
the  Mills  Bill  as  a  complete  act,  it  was  more  of  a  tenta- 
tive measure  or  beginning  than  one  intended  as  a  finality. 
It  did  not  deal  effectually  with  ores,  coal,  or  many  articles 
of  prime  necessity  in  domestic  manufactures. 

On  the  other  hand,  there  are  very  conspicuous  mem- 
bers of  the  Republican  party  whose  objections  to  the 

69 


70  TAXATION  AND   WORK'. 

McKinlcy  act  have  only  been  overcome  by  the  assumed 
necessity  of  party  coherence.  It  is  not  probable  that 
there  are  ten  in  one  hundred  Republicans  who  regard  the 
McKinlcy  act  as  one  fit  in  any  sense  to  be  considered  as 
a  permanent  adjustment  of  the  tarifT. 

There  is  also  great  confusion  in  the  public  mind  upon 
this  subject,  and  this  confusion  is  of  course  reflected  in 
varying  action  and  demands  upon  the  members  of  Con- 
gress. Hence  it  has  become  necessary  in  the  present 
session  to  make  a  beginning  only  by  introducing  simple 
and  separate  measures  for  removing  the  duty  from  wool 
and  a  few  other  crude  materials. 

On  the  other  hand,  we  may  be  wholly  dissatisfied  with 
the  motive,  form,  and  substance  of  all  the  tariff  bills  that 
have  been  enacted  since  the  year  1861  inclusive,  except  as 
war  measures  ;  yet  they  have  been  in  force  on  substan- 
tially the  same  lines  for  almost  a  generation.  Great 
branches  of  industry  have  become  adjusted  to  these  con- 
ditions. It  is  therefore  expedient  for  all  who  take  part  in 
this  discussion  to  treat  this  matter  in  a  judicial  way,  so  as 
to  give  a  true  direction  to  the  process  of  tariff  reduction, 
dealing  especially  with  the  element  of  time  in  the  most 
careful  manner  in  making  great  changes. 

It  seems  to  be  very  certain  that  whoever  may  be  elected 
President  in  November  next,  the  majority  of  the  House 
of  Representatives,  without  strict  regard  to  party  lines, 
will  be  elected  only  upon  the  assurance  of  nearly  every 
candidate  that  he  will  sustain  a  complete  measure  for  the 
reduction  of  the  tariff.  Even  if  a  majority  of  the  mem-, 
bers  of  the  Senate  may  not  have  been  chosen  upon  that 
issue,  it  is  yet  very  certain  that  a  working  majority  will 
sustain  any  judicious  measure  of  general  tariff  reduction 
that  may  have  been  carefully  framed  in  the  House  of 
Representatives.  In  this  view  it  becomes  interesting  to 
note  the  signs  of  the  times. 


FREE    TRADE   THE  OBJECTIVE  POINT.  "J I 

The  beginning  of  an  alliance  of  members  of  both  parties 
in  dealing  with  financial  questions  has  been  brought  about 
in  the  recent  action  upon  the  free  coinage  of  silver.  After 
the  Presidential  election  is  ended,  in  the  second  session 
of  the  present  Congress,  what  is  more  likely  to  occur  than 
that  men  who  have  co-operated  together  in  endeavoring 
to  establish  the  currency  of  the  country  upon  a  safe  and 
solid  basis  should  again  co-operate  in  the  reform  of  the 
present  system  of  excessive  and  badly  adjusted  taxa- 
tion? 

It  has  been  demonstrated  that  the  revenue  from  liquors 
and  tobacco  under  existing  acts  even  now  suffices  to 
meet  all  the  expenses  of  the  government,  except  the  pen- 
sions, with  a  margin  over.  In  the  second  session  of  the 
present  Congress,  legislation  will  be  directed  toward  mak- 
ing provision  for  the  expenditures  for  the  fiscal  year 
beginning  June  30,  1893,  and  ending  June  30,  1894.  In 
that  financial  year,  according  to  the  statements  recently 
submitted  by  the  Commissioner  of  Pensions,  nearly  all 
claims  for  pensions  under  existing  acts  will  have  been 
audited,  to  the  end  that  there  will  be  no  longer  any  first 
payments  or  payment  of  arrears  to  be  made.  These  first 
payments  now  constitute  about  one  third  of  the  outgo. 
After  they  are  all  liquidated  the  annual  pension  roll  will 
not  exceed  the  sum  of  $100,000,000  a  year,  if  it  comes  to 
so  much.  When  that  point  is  reached  another  year  will 
have  elapsed,  and  the  revenue  from  liquors  and  tobacco 
will  then  be  so  much  in  excess  of  the  other  expenditures 
as  to  cover  a  considerable  part  of  the  pension  roll.  The 
revenue  needed  from  customs  on  other  articles  than  liquor 
and  tobacco  may  then  be  less  than  $100,000,000. 

It  would  therefore,  be,  wholly  within  the  power  of  this 
Congress  at  its  second  session  to  abate  all  duties  upon 
crude  and  partly  manufactured  articles  that  are  necessary 
in  the  processes  of  domestic  industry,  and  to  frameasim- 


72  TAX  A  TION  AND   WORK. 

pie  and  consistent  measure  of  duties  upon  other  materials 
at  such  rates  as  might  yield  the  desired  revenue.  It  needs 
only  that  the  people  of  this  country  should  exert  their 
will  and  make  their  will  manifest,  and  then  every  obstacle 
that  now  stands  in  the  way  of  such  a  simple  and  effectual 
method  of  dealing  with  the  subject  of  taxation  will  vanish 
like  dew  before  the  sun. 

In  anticipation  of  such  an  alliance  of  Republicans  and 
Democrats,  without  regard  to  party  affiliations,  for  tariff 
reform  and  for  a  reduction  of  taxation,  it  becomes  expe- 
dient to  deal  with  the  fundamental  principles  of  taxation. 
From  the  days  of  Alexander  Hamilton,  through  the 
discussions  in  the  time  of  Clay  and  Webster,  thence  down 
to  the  date  in  1867  when  the  late  Erastus  B.  Bigelow  was 
one  of  the  most  conspicuous  devotees  of  the  protective 
system,  as  well  as  at  the  present  time,  the  objective  point 
of  the  protective  system  has  been  held  to  be  ultimate  Free 
Trade.  The  only  difference  between  reasonable  men — put- 
ting aside  the  dogma  of  "  Protection  with  incidental 
revenue  "  as  one  that  requires  no  further  consideration — 
now  is  as  to  the  time  and  method  of  beginning  the  reform 
of  which  the  agreed  objective  point  is  ultimate  Free  Trade. 
This  fact  is  demonstrated  by  the  Republican  measures  for 
treaties  of  reciprocity.  Such  measures  are  merely  indirect 
devices  for  attaining  partial  Free  Trade  by  discrimination 
among  countries  and  subjects  of  taxation,  and  also  by  the 
increase  in  the  free  list  in  the  McKinley  act. 

The  time  is  therefore  now  ripe  to  deal  with  fundamental 
principles.  The  Republican  party,  as  a  party,  has  planted 
itself  upon  what  it  holds  to  be  the  "  Principle  of  Protec- 
tion^  Its  representatives  have  constantly  affirmed  that 
any  changes  which  may  be  made  in  existing  acts  for  the 
collection  of  duties  must  be  made  only  by  those  who  will 
deal  with  it  as  a  principle.     The  Democratic  party  has  not 


FREE   TRADE   THE  OBJECTIVE  POINT.  73 

declared  absolute  Free  Trade  to  be  its  motive,  because 
that  would  involve  a  discontinuance  of  custom-houses. 
Under  our  present  system  it  will  long  remain  necessary 
for  Free  Trade  to  be  qualified  by  the  necessity  for  the 
collection  of  a  certain  amount  of  revenue  from  duties  upon 
imports. 

Under  such  conditions  it  follows  that  the  whole  subject 
should  be  removed  from  party  politics,  and  ought  to  cease 
to  be  an  element  in  party  divisions,  to  the  end  that  all 
obstructions  which  have  heretofore  prevented  men  of 
either  party  from  acting  together  may  be  removed,  as 
they  have  been  in  dealing  with  the  silver  question. 

It  cannot  be  doubted  that  it  is  the  will  of  the  people  of 
this  country  that  its  unit  of  value  shall  remain  what  it 
now  is ;  to  wit,  a  dollar  which  is  worth  as  much  after  it  is 
melted  as  it  is  in  the  coin.  It  is  the  will  of  the  people  of 
this  country  that  no  fiat  dollar,  or  dollar  made  of  silver 
that  is  not  worth  as  much  after  it  is  melted  as  it  purports 
to  be  worth  in  the  coin,  shall  be  coined  without  limit  or 
continue  to  be  made  a  full  legal  tender.  It  is  the  will  of 
the  people  of  this  country  that  the  money  in  which  the 
workman  is  paid  shall  be  equal  in  its  purchasing  power  or 
value  to  the  money  in  which  banks  and  bankers  must  of 
necessity  transact  their  business  in  order  to  maintain 
their  credit  and  to  retain  the  confidence  of  the  business 
community. 

It  is  the  will  of  the  people  of  this  country  that  its  sys- 
tem of  taxation  shall  be  simple  and  plain  ;  that  the  sum 
of  money  raised  by  taxation  shall  not  exceed  what  is 
required  for  the  conduct  of  the  government  when  eco- 
nomically administered  ;  and  that  all  taxes  that  the  people 
pay,  the  government  shall  receive.  The  problem  is  how  to 
adjust  legislation  so  as  to  give  expression  to  these  pur- 
poses.    That  is  a  question  of  practical  legislation. 


74  TAX  A  TJChV  AXD    WORK. 

Now  it  will  be  apparent  that  no  true  or  just  solution  of 
this  problem  can  be  reached  except  through  a  discussion 
of  the  underlying  principles  which  must  govern  any  policy 
of  taxation.  If  there  were  no  necessity  for  a  revenue  to 
support  the  government,  no  sane  man  would  propose  to 
put  a  tax  or  duty  upon  anything  either  of  foreign  or  do- 
mestic origin  ;  but  since  there  is  a  necessity  for  raising  a 
certain  amount  of  revenue  by  duties  upon  imports,  no 
judicious  person  would  assess  these  duties  without  such 
discrimination  in  the  choice  of  subjects  of  taxation  and 
in  the  mode  of  applying  the  duties  as  would  most  effectu- 
ally promote  domestic  industry  and  protect  home  labor 
from  injury. 

The  objective  point  of  both  the  systems  now  contend- 
ing for  preference  is  the  same.  Their  representatives,  as 
a  rule,  are  equally  sincere  in  the  conviction  that  their 
chosen  method  will  most  fully  secure  the  objects  named. 
What  is  called  Protection  and  what  is  called  Free  Trade, 
qualified  only  by  the  necessity  of  a  moderate  tariff  for 
revenue  purposes,  are  simply  names  representing  the  same 
purpose. 

Ultimate  Free  Trade  is  the  declared  object  of  the  advo- 
cates of  what  is  commonly  called  Protection,  to  be  reached 
at  some  future  date,  when  certain  conditions  precedent 
have  been  secured.  Free  trade,  qualified  by  a  tariff  for 
revenue  only,  is  the  objective  point  of  the  other  side. 
The  difference  is  only  upon  the  question  of  the  time  when 
to  begin  so  as  to  reach  the  objective  point  which  is  com- 
mon to  both.  Recourse  may  therefore  be  had  to  the 
simple  elements  of  the  case  which  may  be  developed  by 
the  consideration  of  two  plain  questions  : 

First,  the  principle  of  Protection,  what  is  it  ? 

Second,  the  principle  of  Free  Trade,  what  is  it  ? 

If  there  is  a  distinct  underlying  principle  governing  the 


FREE  TRADE   THE  OBJECTIVE  POINT  75 

case,  then,  of  course,  the  policy  of  the  country  must 
sooner  or  later  become  adjusted  to  that  fundamental 
principle,  whatever  it  is,  because  the  definition  of  a  prin- 
ciple is,  "  a  rule  of  action  among  human  beings."  If  there 
is  a  principle  underlying  the  one  and  not  the  other  theory, 
then  the  one  which  is  based  upon  a  principle  will  in  the 
end  be  adopted  and  will  govern  the  policy  of  the  country. 
English  jurists  have  an  excellent  method  of  defining 
the  meaning  of  words  before  proceeding  to  incorporate 
them  in  any  acts  of  legislation.  It  may  be  well  to  adopt 
this  method  in  dealing  with  the  fundamental  questions 
upon  which  our  acts  of  taxation  should  be  framed.  That 
method  will  be  adopted  in  the  subsequent  chapters. 


CHAPTER  XIV. 

Attempted  Definition  of  the  Princitle   of  Pro- 
tection BY  Senators  Sherman,  Hoar, 
and  Aldrich. 

In  Webster's  Dictionary  the  word  Principle  is  defined 
as  a  "truth  admitted  either  without  proof,  or  considered 
as  having  been  before  proved  ;  a  settled  law  or  rule  of 
action  in  human  beings." 

The  word  Policy  is  defined  as  "  that  system  of  measures 
which  the  sovereign  of  a  country  adopts  and  pursues  as 
the  best  adapted  to  the  interests  of  the  nation." 

If  a  system  of  taxation  can  be  founded  upon  a  principle 
according  to  the  definition  given  in  the  dictionary,  any 
subsequent  discussion  of  the  matter  must  be  without  effect. 
If,  however,  that  which  is  defined  as  a  principle  is  merely  a 
policy,  then  reasonable  men  may  rightly  change  their 
views  of  what  the  policy  should  be  according  to  their  ex- 
perience or  knowledge  of  the  effects  and  conditions  which 
have  been  developed  under  the  application  of  that  policy. 
The  importance  of  this  discrimination  between  a  principle 
and  a  policy  will  become  apparent  as  this  subject  is  de- 
veloped. 

Among  those  who  took  part  in  promoting  the  protec- 
tive measures  which  were  adopted  subsequently  to  the 
war,  no  one  attained  greater  influence  than  the  late  Eras- 
tus  B.  Bigelow.  He  was  substantially  the  author  of  the 
Wool  and  Woollen  tariff,  of  which  the  present  provisions  of 

76 


THE  PRINCIPLE  OF  PROTECTION.  77 

the  McKinley  act  on  wool  and  woollens  are  but  a  new  ad- 
justment. This  original  wool  and  woollen  tariff  was  intel- 
ligently framed,  and  was  justified  on  very  simple  grounds. 
It  was  held  that  there  should  be  a  specific  duty  upon 
foreign  wool  for  the  protection  of  the  domestic  wool- 
grower.  It  was  believed  that  this  duty  would  raise  the 
price  of  all  wool,  domestic  as  well  as  foreign,  and  thus  in- 
crease the  cost  of  wool  to  the  manufacturer.  A  provision 
was  therefore  carefully  framed  for  assessing  a  specific  duty 
upon  woollen  manufactures,  the  intention  of  which  was  to 
give  exact  compensation  to  the  woollen  manufacturer  for 
the  increased  cost  of  raw  material  to  which  he  would  be 
subjected  by  the  duty  on  wool.  There  was  no  conceal- 
ment and  no  reservation  about  this  declared  purpose. 

It  was  held  by  Mr.  Bigelow  and  his  associates  that  in 
this  way  the  woollen  manufacturer  would  be  placed  in  the 
same  position  as  that  which  he  would  hold  if  there  were 
no  specific  duty  either  upon  the  wool  or  upon  the  goods. 
This  matter  having  been  adjusted,  it  was  then  held  by  Mr. 
Bigelow  and  his  associates  that  there  should  be  a  moderate 
ad-valorcm  duty  of  twenty-five  per  cent,  upon  woollen  and 
worsted  fabrics,  for  the  purpose  of  protecting  the  manufac- 
turers. The  justification  of  this  protective  duty  of  twen- 
ty-five per  cent,  was  the  alleged  higher  cost  of  labor  in 
this  country  as  compared  to  the  cost  of  labor  in  foreign 
countries.  Ad-valorevi  duties  were  therefore  imposed 
upon  woollen  and  worsted  fabrics  in  addition  to  the  spe- 
cific compensating  duties  upon  the  raw  wool,  for  the  dis- 
tinct purpose  of  Protection,  and  this  protective  duty  was 
at  the  rate  of  twenty-five  per  centum.  Reference  may  be 
had  to  the  arguments  before  the  Committee  of  Ways  and 
Means  by  which  they  were  governed  in  framing  these 
acts.  Mr.  Bigelow  did  not  justify  protective  legislation 
on  the  ground  of  a  principle.     He  held  that  a  protective 


78  TAX  A  TION  AND   WORK. 

tariff  should  be  adopted  merely  as  a  matter  of  policy.  He 
and  his  associates  presented  the  case  to  Congress  as  one 
to  be  governed  by  their  choice  or  discretion. 

In  his  last  pamphlet  dealing  with  the  protective  system 
in  1877  Mr,  Bigelow  defined  his  position  and  that  of  his 
associates  in  these  words :  "  There  is  no  Jtltiniate  principle 
of  universal  application  included  either  in  Free  Trade  or  Pro- 
tection ;  tJicy  are  questions  of  policy  T 

Mr.  Bigelow's  policy  has  been  an  utter  failure  ;  the  wool 
and  woollen  tariff  has  been  altered,  amended,  and  in- 
creased, each  time  under  the  direction  of  its  friends,  and 
the  last  state  and  condition  of  the  wool-grower  and  the 
woollen  manufacturer  has  been  worse  than  the  first.  Is  it 
not  time  to  change  a  policy  which  the  original  promoter 
declared  to  be  founded  on  no  principle  whatever  ? 

It  has  been  wholly  upon  the  ground  of  policy  and  not 
of  principle  that  the  war  tariff  has  been  subsequently 
amended  and  altered  by  the  remission  of  duties  on  tea, 
coffee,  and  sugar,  by  the  enactment  of  the  tariff  of  1883, 
and  by  other  changes  down  to  the  adoption  of  the  Mc- 
Kinley  act.  Then  came  a  very  profound  change  in  the 
declared  purpose  of  the  promoters  of  the  protective  theory. 
In  the  words  of  its  author  this  ;/rzc  purpose  is  ^'Protection 
with  incidental  revenue^  It  has  been  held  in  recent  dis- 
cussions that  the  principle  of  Protection  has  become  a 
settled  law  or  rule  of  action  which  must  govern  our  future 
policy,  and  which  is  not  a  subject  of  further  discussion.  It 
is  also  held  the  revenue  should  be  the  incident,  Protection 
the  end  to  be  assured  by  a  tariff. 

But  to  this  perversion  of  principle  and  policy  alike,  only 
an  insignificant  fraction  of  the  people  or  of  the  legislators 
of  the  country  have  ever  given  their  adhesion.  The  choice 
is  therefore  presented  to  those  who  defend  existing  acts 
of  tariff  legislation,  either  to  present  a  principle  of  taxa- 


THE  PRINCIPLE  OF  PROTECTION.  79 

tion  sustaining  those  acts,  or  else  to  justify  the  existing 
acts  as  true  measures  for  securing  the  enforcement  of  a 
poHcy  which  is  for  the  general  welfare. 

In  all  the  recent  discussions  in  defence  of  the  existing 
tariff  acts,  public  speakers  both  in  Congress  and  without 
have  presented  the  case  as  one  founded  upon  a  distinct 
principle.  That  is  to  say.  Protection  in  its  technical  sense 
as  brought  into  effect  by  the  McKinley  act  is  claimed  to 
be  based  upon  an  "  admitted  truth  already  proved,  or 
upon  a  rule  of  action  or  settled  law  governing  human 
beings." 

It  may  now  be  judicious  to  revert  again  to  the  diction- 
ary for  a  definition.  What  is  Protection  ?  The  definition 
is,  "  the  act  of  protecting,  defence,  shelter  from  evil,  pres- 
ervation from  loss,  injury,  or  annoyance." 

It  therefore  follows  that  those  who  would  forbid  the 
free  exchange  of  the  excess  of  the  products  of  our  fields, 
forests,  mines,  and  of  our  factories  which  we  do  not  want 
and  cannot  consume  ourselves,  for  the  goods  and  wares 
which  are  produced  in  other  countries  which  we  do  want 
and  can  use  in  the  processes  of  domestic  industry,  must 
justify  such  interference  with  the  laws  of  commerce  upon 
the  ground  that  such  a  free  exchange  of  product  for  pro- 
duct will  inflict  "  loss,  injury,  or  annoyance,"  upon  the 
people  of  this  country.  They  must  justify  these  acts  upon 
the  ground  that  it  is  the  function  of  the  legislator  to 
"defend  "  the  people  of  this  country  so  as  to  give  them 
"shelter  from  an  evil,"  which  may  ensue  if  they  are 
allowed  to  have  their  own  way,  and  to  exchange  their 
products  with  other  countries  on  such  terms  as  appear  to 
them  to  be  profitable. 

Can  there  be  any  such  justification  ?  It  is  apparent 
that  unless  there  is  a  profit,  gain,  or  advantage  to  both 
parties  in  any  mutual  service  or  exchange,  then  such  ex- 


80  TAXA  TION  AND   WORK. 

change,  in  which  all  commerce  consists,  must  cease.  No 
trade  or  commerce  has  any  duration  among  men,  and  no 
transactions  are  repeated  in  which  any  party  or  nation 
gains  at  the  loss  of  any  other.  There  must  be  a  mutual 
service  and  a  mutual  benefit  in  all  exchanges,  else  they 
stop.  All  business  experience  merely  consists  in  so  con- 
ducting trade  and  commerce  that  it  shall  be  profitable  to 
the  buyer  as  well  as  to  the  seller,  and  vice  versa.  This  being 
an  elementary  truth,  how  can  any  obstruction  to  such  ex- 
changes be  defended  ?  The  so-called  "  Principle  of  Pro- 
tection "  must  be  defended,  if  at  all,  consistently  with  the 
definition  of  the  words  as  those  definitions  are  given  in 
the  dictionary.  Lest  the  writer  might  do  an  injustice  to 
those  who  claim  to  represent  the  "  Principle  of  Protection  '' 
he  lately  transmitted  a  letter  to  several  of  the  leading 
supporters  of  the  McKinley  act,  asking  them  the  simple 
question  :  "  What  is  the  principle  of  Protection  ?  " 

Among  all  those,  ten  in  number,  to  whom  this  letter  was 
addressed,  Mr.  William  McKinley,  Jr.,  was  the  only  one 
who  failed  to  make  a  reply.  The  first  missive  was  sent  to 
Senator  George  F.  Hoar,  of  Massachusetts,  and  through 
an  error  of  the  stenographer  he  was  asked  to  define  the 
principle  of  Free  Trade,  which  he  did  in  the  following 
terms : 

"  You  ask  me  to  give  you  in  a  concise  way  my  conception  of  the  Principle 
of  Free  Trade.  I  am  not  sure  that  your  type-writer  or  secretary  has  not 
accidentally  mis-stated  your  desire.  I  should  have  supposed  you  would  have 
been  more  likely  to  ask  me  to  make  for  you  a  statement  of  the  principle  of 
Protection  in  which  I  am  a  believer,  than  the  jirinciple  of  Free  Trade,  in  which 
I  suppose  you  are  a  believer.  But  I  will  state  the  doctrine  of  Free  Trade  as 
I  understand  it. 

"  I  suppose  that  the  principle  of  Free  Trade  does  not  necessarily  imply  that 
there  shall  be  no  taxes  or  duties  upon  imports,  but  it  regards  such  tax  or 
duty  as  a  necessary  evil,  like  any  other  mere  tax  which  compels  men  to  con- 
tribute of  their  own  property  to  support  the  government.  But  I  supjiose 
that  the  principle  of  the  free-trader  is  that  no  such  duty  or  tax  should  be  laid 


THE  PRINCIPLE  OF  PROTECTION.  8 1 

or  determined  in  its  amount  by  the  desire  to  encourage  the  establishment, 
in  the  country  raising  it,  of  any  industry  or  employment  which  would  not 
otherwise  be  established,  or  to  increase  such  employment  or  industry  in  con- 
sequence of  the  duty  or  tax  to  an  extent  to  which  it  would  not  be  increased 
without  it ;  or  to  maintain,  and  continue,  in  consequence  of  the  tax  or  duty, 
any  existing  industry  or  employment  which  would  not  be  maintained  or 
continued  without  it. 

"  I  am  faithfully  yours, 

"  Geo.  F.  Hoar. 

Upon  discovering  the  mistake  Senator  Hoar  was  asked 
to  define  the  principle  of  Protection,  and  to  this  he  made 
the  following  response : 

"Worcester,  Mass.,  Nov.  i8,  iSgi. 

"  You  meant,  as  I  thought,  to  ask  me  to  state  the  Principle  of  Pro- 
tection. I  think  that  you  can  perhaps  infer  my  definition  of  Protec- 
tion from  my  definition  of  Free  Trade  which  I  sent  you  in  my  letter 
of  Nov.  13th.  I  think  Protection  as  used  in  our  political  and  economic 
discussions,  is  the  imposing  of  such  duties  on  the  importation  of  for- 
eign products  as  will  prevent  a  domestic  producer  of  the  same  article 
from  having  his  business  destroyed  by  the  competition  of  the  foreign 
import,  while  he  establishes  it ;  or  will  enable  him  to  maintain  the 
production  without  its  being  destroyed  or  rendered  unprofitable  by  the 
competition  of  the  foreign  article  after  it  is  established,  when  he  could 
not  otherwise  so  establish  or  maintain  it  ;  or  the  enabling  him  to  pay 
larger  wages  in  such  production  than  he  could  pay  if  he  were  subject  to  the 
foreign  competition. 

"  I  do  not  suppose  that  such  Protection  will  ordinarily  result  in  permanently 
raising  the  domestic  price  or  in  permanently  arresting  or  diminishing  its 
fall.  But  it  protects  the  domestic  producer  against  large  combinations  of 
foreign  capital  or  against  temporary  disturbances  in  the  market  price  by 
throwing  upon  the  American  market  the  surplus  products  of  the  foreign 
countries  at  less  than  the  cost  of  their  production,  leaving  the  foreigner  to 
raise  his  price  again  if  that  be  found  practicable,  after  the  domestic  manu- 
facture has  been  destroyed. 

"  If  you  propose  to  quote  my  definition  in  ]iul)lic,  perhaps  justice  to  me 
would  require  that  you  should  cpiote  my  definition  of  Free  Trade  as  well  as 
my  definition  of  Protection, 

"  I  am  faitiifully  yours, 

"  Geo.  F.  Hoar." 


82  TAX  A  TION'  AND   WORK. 

Senator  Nelson  W.  Aldrich,  whose  ability  in  defending 
the  IMcKinley  act  in  its  details  is  deserving  of  all  the 
credit  due  to  the  successful  advocate  in  a  bad  cause, 
replied  to  the  question  in  the  following  terms  : 

"  United  States  Senate,  Washington,  D.  C, 
Dec.  9,  1891. 
"  I  have  your  favor  of  recent  date  asking  me  for  a  concise  definition  of  the 
principle  of  Protection.  Tlie  only  principle  I  know  of  universal  application 
to  our  customs  legislation  is  that  it  should  be  of  such  a  character  at  all  times 
as  to  secure  the  highest  degree  of  welfare  to  the  people  of  the  United  States. 
The  practical  application  of  this  rule  of  action  under  existing  conditions 
leads  to  the  admission  of  one  class  of  articles  free  of  duty  while  it  imposes 
upon  another  class  revenue  duties,  and  upon  still  another  levies  protective 
duties.  It  also  provides  for  the  free  admission  of  articles  or  the  reduction 
of  duties  through  agreements  for  reciprocal  trade.  To  state  definitely  just 
what  articles  should  be  included  in  each  of  these  classes  and  the  reasons  for 
such  inclusion  would  require  more  time  than  I  have  at  my  disposal,  and 
more  space  than  you  would  be  willing  to  give  to  a  '  concise  '  definition. 

"  Very  truly  yours, 

"  Nelson  W.  Ai.drich." 

There  are  very  many  persons  who  so  fully  concur  in 
the  defence  of  honest  money  and  sound  finance  advocated 
by  Senator  John  Sherman,  that  they  might  well  hope  to 
reach  concurrence  with  him  also  in  the  matter  of  taxa- 
tion.    Senator  Sherman  made  the  following  reply  : 

"  Senate  Chamber,  Washington,  Nov.  30,  1891. 
"It  is  difficult  to  answer  your  note  of  the  25th  by  a  phrase  or  two.  The 
common  arguments  in  support  of  the  principle  of  Protection  as  a  necessary 
feature  of  every  tariff  law  have  been  so  often  stated  that  if  I  had  time  I 
could  select  from  the  official  recommendations  of  nearly  every  President  up 
to  and  including  General  Jackson,  clear  and  strong  declarations  in  favor  of 
Protection  as  an  object  equal  in  importance  to  that  of  revenue  in  our  tariff 
laws.  It  is  an  axiom  recognized  and  practised  by  all  nations  that  a  duty  on 
imported  goods  is  the  most  convenient,  the  cheapest,  and  the  best  mode  of 
levying  revenue  for  the  support  of  any  government,  whatever  may  be  its 
form.  It  is  equally  clear  that  a  uniform  duty  on  all  kinds  of  imported  goods 
would  be  unjust  to  the  consumer.     Therefore  a  discrimination  of  rates  on 


1 


THE  PRINCIPLE  OF  PROTECTION.  83 

different  articles  is  unavoidable.  The  best  policy  for  any  nation  is  that 
which,  while  securing  sufficient  revenue,  will  promote  a  diversity  of  produc- 
tions and  as  extensive  a  range  of  employments  as  may  be  permitted  by  the 
climate  and  natural  resources  of  the  country.  In  the  United  States  every 
tariff  law  since  the  beginning  of  the  government  has  recognized  the  prin- 
ciple and  acted  upon  the  policy  of  Protection.  The  degree  of  Protection 
and  the  amount  of  revenue  required  must  vary  from  time  to  time  according 
to  the  wants  of  the  government,  or  the  condition  of  domestic  industries. 
Upon  these  details  there  has  been,  and  always  will  be,  a  difference  of 
opinion,  but  whatever  may  be  the  theoretical  views  of  free-traders,  the  prac- 
tical framing  of  a  tariff  law  necessarily  involves  a  consideration  of  the  rates 
which  will  either  injure  or  improve  home  industries.  A  practical  business 
man  would  seek  to  give  to  each  industry  suitable  to  our  climate  that  degree 
of  Protection  which  will  compensate  for  the  difference  in  the  rate  of  wages 
in  our  and  other  countries,  and  with  a  view  to  induce  capital  to  embark  in 
new  enterprises,  and  to  employ  labor  that  would  not  be  degraded  by  wages 
below  the  standard  of  comfort  which  American  laborers  ought  to  enjoy. 

"  Very  truly  yours, 

"  John  Sherman." 

Hon.  Thomas  B.  Reed  sent  me  in  reply  to  my  request 
a  copy  of  his  review  of  the  Mills  Tariff  Bill.  As  I  did  not 
find  any  statement  of  a  principle  I  made  a  second  request, 
to  which  Mr.  Reed  submitted  the  following  rejoinder: 

"  You  ask  me  to  state  the  principle  of  Protection,  defining  the  word 
'  principle'  as  '  a  rule  of  action  and  admitted  truth  requiring  no  proof.'  If 
you  or  anybody  else  could  state  the  principle  of  Protection  in  such  form  that 
it  would  be  an  'admitted  truth,  requiring  no  proof,'  you  would  not  be  able 
to  write  your  articles  in  favor  of  Free  Trade,  nor  would  I  have  made  a 
speech." 

In  this  Mr.  Reed  touches  the  very  nub  of  the  case,  so 
as  to  bring  out  the  fact  that  the  distinguished  gentlemen 
whose  replies  have  been  previously  given  have  simply 
justified  3. policy  under  the  guise  of  z. principle. 

Other  letters  from  many  other  correspondents  are  all  in 
the  same  direction.  The  space  available  for  this  discus- 
sion forbids  giving  any  more  of  the  answers  that  have 
been  received. 


84  TAXATION  AND    WORK. 

I  have  given  enough  to  make  it  apparent  that  in  no 
one  of  these  statements  is  there  any  definition  of  a  prin- 
ciple according  to  the  construction  which  would  be  given 
to  that  word  in  any  court  of  justice.  Each  respondent 
gives  the  definition  of  a  policy,  which  he  thinks  it  would 
be  for  the  best  interest  of  the  country  to  maintain,  but 
which  many  other  persons  of  equally  sound  judgment  and 
capacity  believe  would  work  injury  instead  of  benefit. 

It  may  be  remarked,  however,  that  the  defence  of  the 
policy  of  Protection  rests  wholly  upon  the  assumption 
that  because  the  rates  of  wages  are  higher  in  this  country 
than  they  are  in  others,  therefore  the  cost  of  labor  in  each 
unit  of  product  must  be  greater,  and  that  leads  to  the 
final  point  upon  which  I  believe  Mr.  James  G.  Blaine  once 
made  a  declaration,  that  in  the  end  the  tariff  question  is 
a  mere  question  of  wages. 

If  it  can  be  proved  that  the  rates  of  wages — which  are 
admittedly  higher  in  this  country  than  in  any  other,  have 
been  attained  in  spite  of  the  interference  with  commerce 
in  the  free  exchanges  of  this  country,  and  not  by  reason 
of  that  policy,  then  the  whole  system  must  fall. 

If  high  rates  of  wages  are  the  necessary  correlative  or 
result  of  the  production  of  the  goods  and  wares,  from  the 
sale  of  which  the  wages  or  earnings  are  recovered  or 
derived,  because  of  the  low  cost  at  which  such  products 
can  be  made  in  this  country,  then  it  would  of  necessity 
ensue  that  we  might  control  the  commerce  of  the  world, 
and  should  remove  every  obstruction  thereto. 


CHAPTER   XV. 
Hamilton's  Policy. 

The  replies  of  the  Senators  previously  given  to  the  re- 
quest for  a  definition  of  the  principle  of  Protection  have 
given  their  conception  of  the  facts,  especially  in  respect  to 
wages,  on  which  they  justify  their  policy.  I  next  endeav- 
ored to  find  gentlemen  of  authority,  connected  with  the 
higher  institutions  of  learning,  who  might,  either  through 
their  knowledge  of  economic  history,  or  their  position  as 
teachers  of  political  economy,  be  rightly  requested  to  reply 
to  the  same  question.  It  is  singular,  however,  that  there 
is  but  one  gentleman  to  be  found  within  my  knowledge, 
connected  with  any  college  or  university  of  repute,  who 
sustains  the  so-called  principle  of  Protection,  Professor 
Robert  Ellis  Thompson  of  the  University  of  Pennsylva- 
nia.    His  reply  to  my  question  is  as  follows : 

"Philadelphia,  Dec.  4,  i8gi. 

"  It  is  not  so  easy  to  make  a  brief  statement  of  '  the  principle  of  Protec- 
tion '  as  it  is  to  render  that  service  for  the  rival  theory.  Free  Trade  rests  on 
theory  and  assumes  ideal  conditions.  Protection  rests  on  experience,  and 
deals  vfc'ith  actual  conditions.  These  latter  always  are  complex,  and  do  not 
lend  themselves  to  neat  formalization. 

"  In  making  the  attempt  to  supply  what  you  ask,  I  do  so  under  protest 
that  what  I  write  is  inadequate. 

"Nations  are  industrial  as  well  as  political  units.  To  their  industrial 
welfare  a  diversification  of  industry  is  indispensable.  Following  the  law  of 
biological  classification  they  take  high  industrial  rank  or  law,  according  to 
the  measure  of  the  industrial  differentialism  of  the  parts  from  each  other,  and 
from   the  whole.     This  differentialism  is  the  normal  process  of  industrial 

85 


86  TAXATION  AND    WORK. 

growth,  which  would  proceed  equably  and  equally  in  all  countries,  if  the 
conditions  were  the  same  in  all.  But  as  the  world  now  is,  no  two  are  equal ; 
and  tlie  more  advanced  find  their  real  (or  supposed)  interest  in  monopolizing 
what  they  regard  as  the  more  profitable  industries,  and  in  keeping  others  on 
the  level  of  industrial  uniformity.  They  wish  to  supply  the  others  with 
highly  elaborate  products,  and  take  coarser  in  exchange.  The  experience  of 
these  others  is  that  such  exchanges  are  unprofitable,  as  exposing  them  to  the 
largest  risks  in  production,  laying  upon  them  the  heaviest  cost  of  transporta- 
tion, and  leaving  them  incapable  of  military  defence.  Protection  is  their  re- 
sistance to  this  programme,  and  is  exercised  for  them  by  their  government, 
for  the  reason  that  it  is  the  business  of  government  to  '  promote  the  general 
welfare,'  by  exercising  a  supervision  over  the  nation's  industrial  growth  with 
a  view  to  the  proper  co-ordination  of  its  various  branches,  This  duty  of 
government  is  not  tied  to  any  kind  of  legislative  method,  such  as  discrimi- 
nating duties  on  imposts.  It  has  been  exercised  by  prohibitions,  bounties, 
and  other  measures. 

"  I  should  define  protection  as  the  policy  which,  by  the  collective  action 
of  the  nation,  seeks  to  divert  a  part  of  its  capital  into  a  channel  in  which  it 
would  not  flow  otherwise,  and  which  experience  shows  to  be  for  the  general 
benefit. 

"  Very  truly  yours, 

"  R.  E.  Thompson." 

It  will  be  observed  that  while  the  Senators  rest  their 
justification  of  a  high  tariff  upon  an  assumed  difference  in 
the  cost  of  labor  in  this  as  compared  to  other  countries, 
which  excess  of  cost  they  attribute  to  the  admittedly 
higher  rates  of  wages,  Prof.  Thompson  justifies  the  policy 
upon  the  ground  that  "  the  collective  action  of  the  nation 
may  rightly  divert  a  part  of  its  capital  into  a  channel  into 
which  it  would  not  otherwise  flow,  and  which  experience 
shows  to  be  for  the  general  benefit." 

Before  reviewing  this  letter  it  may  be  well  to  revert  to 
the  beginning  of  the  protective  system  in  this  country. 
In  the  discussion  of  the  tariff  question  Alexander  Hamil- 
ton, in  the  celebrated  Report  on  Manufactures,  of  1791, 
was  called  upon  to  meet  a  misapprehension  which  had 
then  prevailed  not  only  in  this  but  in  many  other  coun- 
tries, that   all  wealth  was  derived  from  the  soil,  and  that 


HAMIL TON'S  FOLIC Y.  8/ 

the  processes  of  manufacture  added  nothing  thereto. 
This  misapprehension  which  had  dominated  the  pohcy  of 
nations  is  now  so  obsolete  that  it  has  a  grotesque  sound, 
yet  a  large  part  of  Hamilton's  argument  was  devoted  to 
an  analysis  of  that  idea.  Hamilton  justified  revenue 
duties  so  adjusted  as  to  give  some  advantage  or  stimulus 
to  domestic  industries  and  manufactures  upon  other 
grounds  while  exposing  this  fallacy.     He  said  : 

"  If  the  system  of  perfect  liberty  to  industry  and  commerce  were  the 
prevailing  system  of  nations,  the  arguments  which  dissuade  a  country,  in  the 
predicament  of  the  United  States  from  the  zealous  pursuit  of  manufactures 
would  doubtless  have  great  force.  It  will  not  be  affirmed  that  they  might 
not  be  permitted,  with  few  exceptions,  to  serve  as  a  rule  of  national  con- 
duct  But  the  system  which  has  been  mentioned  is  far  from 

characterizing  the  general  policy  of  nations.  The  prevalent  one  has  been 
regulated  by  an  opposite  spirit. 

"The  greatest  obstacle  of  all  to  the  successful  prosecution  of  a  new  branch 
of  industry  in  a  country  in  which  it  was  before  unknown,  consists,  as  far  as 
the  instances  apply,  in  the  bounties,  premiums,  and  other  aids  which  are 
granted  in  a  variety  of  cases  by  the  nations  in  which  the  establishments  to  be 
imitated  are  previously  introduced." 

He  then  refers  to  the  common  system  of  bounties  upon 
exports  and  other  artificial  methods  of  promoting  com- 
merce in  European  countries.  Hamilton  rests  no  argu- 
ment upon  the  difference  in  wages  and  the  higher  rates 
which  he  refers  to  and  considers  an  advantage  on  the  part 
of  the  United  States. 

The  most  singular  fact  bearing  upon  Professor  Thomp- 
son's justification  by  experience  is  found  in  Hamilton's 
list  of  the  manufacturing  arts  which  were,  at  that  time  in 
1791,  as  he  states,  successfully  established  in  this  country. 
The  following  is  the  statement : 

"  To  all  the  arguments  which  are  brought  to  evince  the  impracticability  of 
success  in  manufacturing  establishments  in  the  United  States,  it  might  have 
been  a  sufficient  answer  to  have  referred  to  the  experience  of  what  has  been 


88  TAXATION  AND   WORK. 

already  done.  It  is  certain  that  several  important  branches  have  grown  up 
and  flourished,  with  a  rapidity  which  surprises,  affording  an  encouraging 
assurance  of  success  in  other  attempts.  Of  these  it  may  not  be  improper  to 
enumerate  the  most  considerable. 

"  I.  Of  skins — Tanned  and  tawed  leather,  dressed  skins,  shoes,  boots, 
and  slippers,  harness  and  saddlery  of  all  kinds,  portmanteaus  and  trunks, 
leather  breeches,  gloves,  muffs  and  tippets,  parchment  and  glue. 

"2.  Of  iron — Bar  and  sheet  iron,  steel,  nail  rods  and  nails,  implements 
of  husbandry,  stoves,  pots  and  other  household  utensils,  the  steel  and  iron- 
work of  carriages,  and  for  ship-building,  anchors,  scale-beams  and  weights, 
and  various  tools  of  artificers,  arms  of  different  kinds,  though  the  manufac- 
ture of  these  last  has  of  late  diminished  for  lack  of  demand. 

"  3.  Of  wood — Ships,  cabinet  wares  and  turnery,  wool  and  cotton  cards, 
and  other  machinery  for  manufactures  and  husbandry,  mathematical  instru- 
ments, coopers'  wares  of  every  kind. 

"4.  Of  flax  and  hemp — Cables,  sail-cloth,  cordage,  twine  and  pack- 
thread. 

"  5.     Bricks  and  coarse  tiles  and  potters'  wares. 

"  6.      Ardent  spirits  and  malt  liquors. 

"  7.  Writing  and  printing  paper,  sheathing  and  wrapping-paper,  paste- 
board, fullers*  or  press  papers,  paper-hangings. 

"  8.  Hats  of  fur  and  wool,  and  mixtures  of  both,  women's  stuff  and  silk 
shoes. 

"9.     Refined  sugars. 

"  10.  Oils  of  animals  and  seeds,  soap,  spermaceti,  and  tallow  candles. 

"11.  Copper  and  brass  wires,  particularly  utensils  for  distillers,  sugar- 
refiners,  and  brewers  ;  and  irons  and  other  articles  for  household  use, 
philosophical  apparatus. 

"12.      Tin  wares  for  most  purposes  of  ordinary  use. 

"13.     Carriages  of  all  kinds. 

"  14.      .Snuff,  chewing  and  smoking  tobacco. 

"15.      Starch  and  hair  powder. 

"  16.      Lamp-black  and  other  painters'  colors. 

"17.     Gunpowder. 

"  Besides  manufactories  of  these  articles,  which  are  carried  on  as  regular 
trades  and  have  attained  to  a  considerable  degree  of  maturity,  there  is  a  vast 
scene  of  household  manufacturing,  which  contributes  more  largely  to  the 
supply  of  the  community  than  could  be  imagined  without  having  made  it  an 
object  of  particular  inquiry.  This  observation  is  the  pleasing  result  of  the 
investigation  to  which  the  subject  of  this  report  has  led,  and  is  applicable  as 
well  to  the  Southern  as  to  the  Middle  and  Northern  States.  Great  quan- 
tities of  coarse  cloths,  coatings,  serges  and  flannels,  linsey-woolsey,  hosiery 
of  wool,  cotton  and  thread,  coarse  fustians,  jeans  and   muslins,  checked  and 


HA  MIL  TON '  S  FOLIC  Y.  89 

striped  cotton  and  linen  goods,  bed-ticks,  coverlets  and  counterpanes,  tow 
linens,  coarse  shirtings,  sheetings,  towelings  and  table  linen,  and  various 
mixtures  of  wool  and  cotton,  and  of  cotton  and  flax  are  made  in  the  house- 
hold way,  and,  in  many  instances,  to  an  extent  not  only  sufficient  for  the 
supply  of  the  families  in  which  they  are  made,  but  for  sale,  and  even,  in 
some  cases,  for  exportation.  It  is  computed  in  a  number  of  districts  that 
two-thirds,  three-fourths,  or  even  four-fifths  of  all  the  clothing  of  the  in- 
habitants are  made  by  themselves.  The  importance  of  so  great  a  progress 
as  appears  to  have  been  made  in  family  manufactures,  within  a  few  years, 
both  in  a  moral  and  political  view,  renders  the  fact  highly  interesting. 

"  Neither  does  the  above  enumeration  comprehend  all  the  articles  which 
are  manufactured  as  regular  trades.  Many  others  occur,  which  are  equally 
well  established,  but  which,  not  being  of  equal  importance,  have  been 
omitted.  And  there  are  many  attempts,  still  in  their  infancy,  which, 
though  attended  with  very  favorable  appearances,  could  not  properly  have 
been  comprised  in  an  enumeration  of  manufactories  already  established. 
There  are  other  articles,  also  of  great  importance,  which  though  strictly 
speaking  manufactures,  are  omitted  as  being  immediately  connected  with 
husbandry,  such  are  flour,  pot  and  pearl  ashes,  pitch,  tar  and  turpentine, 
and  the  like." 


If  careful  consideration  be  given  to  Hamilton's  list,  the 
statement  which  has  been  previously  made  in  this  series 
will  be  justified.  There  is  not  a  single  important  branch 
of  manufacturing  industry — except  those  which  have  been 
developed  by  subsequent  inventions — now  established  in 
this  country,  which  was  not,  according  to  Alexander 
Hamilton,  well  established  and  successful  prior  to  1791- 
Among  the  arts  which  have  been  developed  added  sub- 
sequently to  1791  and  through  subsequent  invention,  now 
to  be  found  in  this  country,  the  only  one  of  any  conspic- 
uous importance  is  the  manufacture  of  cotton. 

One  may  therefore  contest  the  ground  upon  which 
Prof.  Thompson  sustains  the  so-called  principle  of  Protec- 
tion, by  the  proof  that  is  found  in  Hamilton's  evidence  of 
success  in  manufactures,  that  experience  does  7iof  justify 
the  claim  of  the  advocates  of  a  high  tariff  to  diversify  in- 
dustry, to  maintain  wages,  or  to  add  to  the  general  pro- 


go  TAX  A  tiojV  and  work. 

duct  of  a  country.    Experience  may  be  cited  to  prove  the 
very  reverse  of  all  these  conditions. 

Reverting  now  to  the  question  of  wages,  it  is  important 
in  the  first  instance  to  submit  some  general  considerations 
to  be  subsequently  dealt  with  in  more  minute  detail.  In 
1880  agriculture  gave  occupation  to  forty  per  cent,  or 
more  of  all  the  people  who  are  occupied  for  gain  in  this 
country.  The  wages  earned  by  those  who  work  for  wages 
in  farm  industry  are  higher  than  they  are  in  any  other 
country  with  the  exception  of  Australia  and  New  Zealand. 
The  product  of  agriculture  was  valued  at  the  farms  in 
1880  by  the  Commissioner  of  Agriculture,  on  a  revision  of 
the  census  figures,  at  a  fraction  under  four  thousand  mil- 
lions ($4,000,000,000).  Taking  no  cognizance  of  the  small 
exchanges  between  ourselves  and  the  neighboring  Do- 
minion of  Canada,  to  whose  people,  owing  to  our  advantage 
in  an  earlier  spring,  we  sell  more  of  the  products  of  agri- 
culture than  we  buy,  there  were  not  in  1880,  and  are  not 
now,  five  per  cent,  of  the  domestic  products  of  agriculture 
of  which  any  corresponding  product  could  be  imported 
from  a  foreign  country.  These  articles  of  possible  import 
consist  of  sugar,  hemp,  flax,  tobacco,  and  wool,  and  a  few 
other  insignificant  articles.  Hemp  and  sugar  have  been  put 
into  the  free  list ;  tobacco,  wool  and  flax  are  now  the  only 
products  of  agriculture  in  whose  behalf  tariff  Protection 
is  demanded  ;  they  do  not  now  constitute  in  value  two 
dollars  in  one  hundred  of  the  products  of  agriculture. 
The  wool  of  Australia  and  New  Zealand  is  produced  at 
higher  rates  of  wages  than  prevail  in  this  country,  yet  a 
duty  is  demanded  for  protection  against  the  import  of 
such  wool  upon  the  ground  of  its  low  cost  of  production. 
Every  other  product  of  our  domestic  agriculture  is  pro- 
duced at  a  lower  cost  and  at  higher  rates  of  wages  than 
prevail  in  any  other  country. 


HAMIL  TON'S  FOLIC Y.  9I 

The  protective  system  cannot,  of  course,  be  invoked  in 
behalf  of  those  who  are  occupied  for  gain  in  professional 
or  personal  service  or  in  trade  and  transportation.  Under 
the  head  of  manufactures,  mechanics,  and  mining,  the 
persons  occupied  in  1880  numbered  3,837,112. 

In  the  specific  list  of  manufacturing,  mechanical,  and 
mining  establishments,  in  which  the  work  is  done  which 
might  be  in  part  subjected  to  foreign  competition,  the 
total  number  was  2,732,595,  of  whom  2,019,045  were  males 
above  sixteen,  531,069  females  above  fifteen,  and  181,921 
young  persons.  The  product  of  these  establishments, 
valued  at  the  works,  amounted  to  $5,369,579,191.  The 
cost  of  the  materials  used  was  $3,396,823,549,  sum  of 
wages  $947,953,795.  It  will  be  observed  that  the  cost  of 
materials  comes  to  ^2>-^-o  P^^  cent.,  the  cost  of  labor  i7yfo- 
per  cent.  But,  under  this  title  there  are  listed  establish- 
ments like  sugar  refineries  and  meat-packing  establish- 
ments, in  which  the  cost  of  labor  is  very  small  and  the 
cost  of  the  materials  is  very  large.  Eliminating  such 
classes,  it  may  fairly  be  considered  that  the  proportion  of 
labor  which  is  directly  exerted  in  the  factory  or  the  work- 
shop is  substantially  twenty-five  per  cent,  of  the  cost  of  the 
goods.  According  to  the  figures  of  the  Commissioner  on 
Woollen  and  Worsted  Manufactures  in  1890,  lately  pub- 
lished, the  percentage  of  labor  is  given  at  twenty-three; 
material  at  sixty  per  cent. 

The  question  may  now  be  asked.  What  are  these  mate- 
rials which  enter  into  the  various  processes  of  the  manu- 
facture of  machinery,  cars,  wagons,  boots  and  shoes, 
textile  fabrics,  food  preparations,  food  in  its  secondary 
condition,  chemicals,  and  the  like  ?  They  are  the  primary 
products  of  the  field,  the  forest,  and  the  mine.  With 
respect  to  all  the  chief  products  of  the  field,  such  as 
cotton,  grain,  hay,  and  the  like,  there  can  be  no  foreign 


92  TAX  A  TION  AND   WORK. 

competition  with  us.  These  articles  come  into  the  cate- 
gory of  those  which  are  produced  at  the  lowest  labor  cost 
and  at  the  highest  rate  of  wages. 

Wool  is  the  sole  product  of  the  field,  except  tobacco 
which  must  be  separately  treated,  on  which  any  considera- 
tion is  claimed  that  is  or  can  be  given  in  tariff  legislation. 
With  respect  to  leather,  lumber,  marbles,  glass,  and  the 
like,  and  with  regard  to  the  ingredients  of  fertilizers  and 
a  vast  number  of  other  chemical  products,  no  other  coun- 
try approaches  us  either  in  the  abundance  of  the  supply 
of  crude  materials  or  in  the  facility  with  which  these 
resources  can  be  worked  at  high  wages  and  low  cost. 

With  respect  to  metal  or  the  products  of  the  mine, 
there  can  be  no  competition  by  other  countries  with  us  in 
copper,  lead,  oil,  and  iron,  except  in  the  latter  case  in 
regard  to  special  qualities  intended  for  particular  purposes. 
If,  then,  the  duties  on  crude  materials  were  wholly  re- 
moved, there  would  remain  only  the  question  of  wages  to 
be  dealt  with  in  specific  manufacturing  industries. 

It  will  be  remarked  that  if  there  were  no  duties  upon 
the  materials  which  are  used  in  the  processes  of  manu- 
facturing industry  this  country  would  hold  a  superiority 
over  all  others  in  the  abundant  supply  of  crude  materials 
derived  from  the  greatest  natural  resources,  from  which 
the  highest  rates  of  wages  are  derived  in  converting  them 
»  to  use  at  the  lowest  cost  per  unit  of  product. 

We  are  thus  led  to  the  simple  question  of  the  expe- 
diency of  tariff  Protection  in  respect  to  those  branches  of 
industry  to  which  thought  is  apt  to  be  limited  when  the 
word  manufactures  is  made  use  of.  The  relation  of  wages 
to  the  cost  of  labor  in  those  specific  branches  of  domestic 
industry  will  be  dealt  with  in  the  subsequent  chapters. 


CHAPTER    XVI. 

Tariff  Protection  does  not  Raise  Wages. 

In  the  last  chapter  the  possibility  of  applying  the  pro- 
tective idea  to  the  building  up  of  specific  branches  of 
industry  within  the  limits  of  this  country  by  obstructing 
imports,  or  by  enhancing  the  cost  of  imported  articles 
even  for  the  time  being,  has  been  narrowed  down  to  those 
special  branches  of  industry  which  are  included  under  the 
title  of  "  Statistics  of  Manufactures  "  in  the  census  reports 
of  the  United  States. 

It  has  been  demonstrated  that  the  number  of  articles, 
and  the  proportionate  value  of  such  articles  as  could  be 
imported  which  belong  under  the  title  of  "  products  of 
agriculture,"  is  so  insignificant  as  not  to  constitute  an  im- 
portant element  in  the  discussion  of  the  subject.  It  may 
also  be  remarked  that  the  total  number  of  persons  occu- 
pied in  mining  who  could  under  any  conceivable  condi- 
tions be  affected  by  foreign  competition  also  represents 
such  an  utterly  insignificant  fraction  of  the  working  popu- 
lation as  to  make  the  application  of  the  legal  aphorism 
'■'■  de  minimis  non  curat  /r^i' "  wholly  applicable  to  them. 
The  only  branch  of  mining  industry  on  whose  behalf  Pro- 
tection has  been  seriously  invoked  is  that  of  the  produc- 
tion of  iron  ore.  In  this  branch  of  mining  the  total 
number  of  persons  employed  in  the  census  year  1890  was 
only  36,341,  their  average  earnings  being  $357  each  for 
the  year ;  a  rate  somewhat  less  than  those  of  a  common 

93 


94  TAXA  TION  AND   WORK. 

laborer  engaged  in  other  occupations.  Moreover,  the 
most  competent  and  skilful  men  who  conduct  the  iron 
industry  have  proved  that  the  more  the  ores  of  Spain  and 
Cuba  are  admitted  freely  the  more  the  domestic  ores  of 
iron  will  be  required.  The  case  is  precisely  analogous  to 
that  of  wool,  in  which  instance  the  duties  on  foreign  wool 
have  resulted  in  the  depression  of  the  price  of  domestic 
wool  to  the  lowest  prices  ever  known. 

We  may  therefore  give  consideration  to  the  specific 
branches  of  industry  which  are  listed  in  the  volume  relat- 
ing to  the  statistics  of  manufactures  of  the  United  States 
Census  of  1880  under  that  title.  It  will  be  observed  that 
the  number  of  persons — men,  women,  and  children — occu- 
pied in  these  manufacturing  arts  was  2,732,595  ;  their  aver- 
age earnings  in  the  census  year  were  three  hundred  and 
ten  dollars  ($310)  each.  But  it  may  not  be  assumed  that 
such  a  very  low  compensation  corresponded  to  the  full 
employment  for  the  year.  It  fell  to  the  writer  to  compute 
the  data  of  the  cotton  manufacture  according  to  the  sched- 
ules which  had  been  prepared.  The  conclusion  which  he 
reached  was  this :  that,  since  the  new  mills,  of  which 
many  were  constructed  during  the  year,  were  included 
without  regard  to  the  time  of  their  operation,  while 
'Others,  owing  to  circumstances,  were  stopped  for  a  part 
of  the  year,  the  sum  of  wages  should  have  been  increased 
by  twenty  per  cent.  But  there  are  many  arts  that  are 
listed  under  the  title  of  manufactures  that  can  only  be 
conducted  at  certain  seasons,  therefore  this  sum  of  wages 
would  represent  even  less  than  three  fourths  of  the  year. 
Giving  due  regard  to  this  element  of  uncertainty  which 
the  census  authorities  of  1890  have  endeavored  to  correct, 
it  would  probably  be  safe  to  estimate  that  the  actual 
average  earnings  of  those  who  are  occupied  under  this 
title  in    1880  approximated   four  hundred  dollars  ($400) 


TARIFF  PROTECTION  DOES  NOT  RAISE    WAGES.     95 

each  for  a  full  year's  work.  Since  i88o  there  has  been  a 
marked  increase  in  the  rates  of  wages  or  earnings  of  all 
occupied  for  gain  above  the  grade  of  common  laborers. 
So  far  as  the  writer  has  been  able  to  obtain  the  data,  this 
advance  in  rates  of  wages  may  be  estimated  at  from  ten 
to  thirty  per  cent,  as  compared  to  the  rates  of  1880;  the 
proportionate  advance  in  each  class  being  in  ratio  to  the 
relative  skill  required  in  the  work.  The  wages  of  the 
common  laborer  have  not  advanced  very  much,  but  he 
has  been  rendered  able  to  buy  more  for  his  wages  on 
account  of  the  reduction  in  prices  ;  the  skilled  laborer  has 
secured  the  highest  rates  of  earnings  ever  known  in  this 
or  any  other  country  and  can  also  buy  more  for  each 
dollar. 

The  advocate  of  Free  Trade  who  denies  this  advance 
makes  a  mistake  ;  the  advocate  of  Protection  who  attrib- 
utes this  advance  to  a  high  tariff  makes  a  greater  mistake. 
The  conclusion  which  the  writer  has  reached  after  a  very 
long  study  of  the  subject  is  that  the  direct  effect  of  a  pro- 
tective tariff  upon  protected  industries  in  respect  both  to 
profits  and  wages  has  been  greatly  exaggerated  by  both 
parties  in  the  discussion.  Its  effect  in  stimulating  a  few 
branches  of  industry  is  hurtful  rather  than  otherwise, 
being  apt  to  end  in  a  local  over-production  ;  this  excess, 
owing  to  the  higher  cost  of  materials  under  the  present 
tariff,  cannot  be  exported,  and  it  therefore  depresses 
prices  until  the  over-production  for  our  own  use  is 
stopped.  The  effect  upon  the  general  progress  of  the 
country  has  not  been  felt  in  any  considerable  measure 
because  of  the  very  limited  number  of  industries  of  which 
a  product  of  like  kind  could  under  any  conditions  be 
imported. 

On  the  other  hand,  the  evil  effect  of  the  obstruction  to 
the  exchange  of  our  own  products  for  those  of  foreign 


96  TAX  A  TION  AND   WORK. 

countries  can  hardly  be  exaggerated,  because  this  influence 
is  felt  in  stopping  the  export  of  that  excess  of  domestic 
products  which  we  cannot  consume  ourselves  and  which 
can  only  be  sold  for  export.  The  prices  of  this  excess 
become  a  regulator  or  determining  factor  in  the  price  of 
all  our  great  crops.  The  high-tariff  system  has  in  my 
judgment  worked  privation,  qualified  in  some  slight  meas- 
ure for  short  periods  by  somewhat  excessive  profits,  but 
has  been  without  permanent  influence  on  wages  unless  to 
retard  the  advance  in  some  small  measure ;  this  general 
advance  has  nevertheless  been  constantly  in  progress. 

The  space  permitted  in  this  series  will  not  allow  a  com- 
plete analysis  of  the  statistics  of  manufactures.  The 
census  documents,  however,  are  of  ready  reference,  and  it 
needs  but  a  short  consideration  of  a  very  few  branches  of 
industry  to  demonstrate  the  point  under  discussion.  In 
a  previous  chapter  this  subject  has  been  touched  upon 
with  reference  to  titles  in  dealing  with  the  census  of 
occupations. 

Referring  to  the  statistics  of  manufactures,  we  find  at 
the  head, — Agricultural  Implements.  In  this  branch  of 
industry  we  lay  claim  to  excel  nearly  every  other  nation, 
and,  in  spite  of  the  relatively  higher  cost  as  compared  to 
other  countries,  due  to  the  duties  upon  iron,  steel,  and 
other  articles  which  are  the  component  materials  of  chief 
value  in  this  branch  of  industry,  we  are  large  exporters  of 
this  class  of  goods.  Moreover,  the  average  wages  in  this 
art  are  much  higher  than  the  average  disclosed  by  the 
general  statistics  of  manufacture  ;  the  amount  earned  by 
each  person  in  the  census  year  having  been  very  nearly 
four  hundred  dollars  ($400),  without  making  any  addition 
for  full  time  to  what  is  disclosed  by  the  figures  them- 
selves.    Actual  average  probably  nearer  $500. 

Under  the  next  title  of  considerable  importance   we 


TARIFF  PROTECTION  DOES  NOT  RAISE    WAGES.      9/ 

come  to  Blacksmithing.  It  goes  without  saying  that  the 
industry  of  the  blacksmith  belongs  of  necessity  to  the 
place  where  he  works.  There  can  be  no  foreign  competi- 
tion of  any  moment  with  him.  Brick-  and  Tile-making 
gives  employment  to  a  large  force  of  stalwart  men  with 
whom  there  can  be  no  foreign  competition ;  Bread  and 
Bakery  products  the  same.  Carriages,  Wagons,  and  Street 
Cars  are  made  almost  exclusively  and  of  necessity  within 
the  limits  of  the  country,  and  of  them  we  are  also  ex- 
porters. The  wages  earned  in  this  branch  of  industry  are 
very  high  relatively  to  all  others,  the  workmen  making 
their  goods  at  low  cost. 

Cheese-  and  Butter-making  is  included  under  the  title 
of  manufactures,  of  which  products  we  are  large  exporters. 
In  Clocks  we  excel  all  nations. 

Whether  we  should  import  any  Clothing,  except  as  a 
mere  **  fad  "  or  fashion  from  other  countries,  cannot  be 
determined  until  the  materials  are  supplied  to  our 
clothiers  on  even  terms  with  their  competitors  in  other 
countries. 

Flour,  Grain,  and  Milling  products  count  very  heavily 
under  the  head  of  manufacturing,  giving  employment  to 
a  very  large  force  at  very  high  wages  relatively  ;  of  course 
there  can  be  no  foreign  competition. 

In  Furniture  we  excel  at  high  wages  and  low  cost,  ex- 
porting it  in  no  inconsiderable  measure.  In  Lumber  and 
Wood-working  we  find  one  of  the  most  considerable  items 
under  the  title  of  manufactures.  In  this,  again,  we  abso- 
lutely need  the  product  of  the  Canadian  forests  in  order 
to  prevent  and  stop  the  destruction  of  our  own. 

Slaughtering  and  Meat-packing  count  for  a  very  large 
element  under  the  title  of  manufactures.  In  this,  again, 
the  wages  are  very  high  and  the  cost  of  the  conversion  of 
the  product  very  low. 


98  TJX  J  TION  AND   WORK. 

In  short,  when  a  thorough  and  judicial  examination  is 
made  of  this  list  of  manufactures,  the  number  of  branches 
of  industry  is  very  small  in  which  any  considerable  foreign 
competition  could  under  any  circumstances  exist,  or  in 
which  articles  could  be  imported  from  any  other  country 
of  like  kind  ;  while  the  number  of  persons  who  could  be 
in  part  subjected  to  foreign  competition  is  distinctly  less 
than  one-half  of  the  whole  number  included  in  this 
specific  census  list.  Again,  a  very  large  part  of  those  who, 
under  our  present  conditions,  are  subjected  to  foreign 
competition  in  some  measure,  would  be  wholly  relieved 
from  foreign  competition  by  removing  the  tariff  tax  from 
the  crude  or  partly  manufactured  materials  which  enter 
into  the  processes  of  the  specific  branches  of  industry  in 
which  they  are  employed. 

My  own  analyses  of  the  occupations  of  17,400,000  men, 
women,  and  children,  who  were  occupied  for  gain  in  1880, 
led  me  to  the  conclusion  that  not  exceeding  1,200,000 
were  engaged  in  any  kind  of  work  of  which  a  product  of 
like  kind  could  be  imported,  of  whom  200,000  were  occu- 
pied in  agriculture.  On  the  other  hand,  computing  num- 
ber of  persons  by  ratio  to  value  of  exports,  1,400,000 
occupied  in  agriculture  and  200,000  in  manufactures 
depended  wholly  on  sales  of  their  product  for  export. 

SUMMARY. 

Total  number  occupied  for  gain 17,400,000 

Subject  in  part  to  foreign  competition  : 

^Ianufactures i  ,000,000 

Agriculture 200,000 

1,200,000 

Producing  wholly  for  export : 

Agriculture 1,400,000 

Manufactures 200,000 

1,600,000 

Directly  affected  by  tariff  legislation. .  2,800,000 

Affected  indirectly,  but  occupied  in 
work  of  which  the  product  could 
neither  be  imported  nor  exported, .  14,600,000 


TARIFF  PROTECTION  DORS  NOT  RAISE    WAGES      99 

It  is  clearly  proved  by  the  figures  of  the  comparative 
wages  in  the  arts  in  whose  behalf  the  Protection  of  a  high 
tariff  has  been  invoked,  that  these  wages  are  relatively 
lower  than  in  the  arts  which  can  not  be  subjected  to 
foreign  competition.  It  may  also  be  held  and  would 
surely  be  proved  by  a  purely  judicial  observation,  that 
there  has  been  no  excessive  profit  covering  a  long  period 
either  in  the  textile  or  metal  industries  that  have  been 
stimulated  by  a  protective  tariff.  According  to  the  ob- 
servation of  the  writer,  covering  fifty  years,  the  protected 
industries  have  been  subject  to  greater  fluctuations,  greater 
variations,  and  to  heavier  losses  than  almost  any  other 
branches  of  industry  that  can  be  named.  Abnormal 
profits  have  sometimes  been  attained  ;  notably  in  the  case 
of  steel,  but  these  profits  may  be  attributed  in  much 
greater  measure  to  the  control  of  the  Bessemer  and  other 
patents  by  a  comparatively  small  number  of  persons,  than 
to  duties  on  imports. 

The  claim  made  by  the  advocates  of  the  McKinley  act 
and  the  various  high  tariffs  that  have  been  enacted  sub- 
sequently to  the  war  tariff,  under  which  the  rates  of  duty 
then  imposed  have  been  actually  raised,  that  the  prosper- 
ity of  this  country  and  the  advance  in  wages  which  have 
marked  the  last  twenty-five  years  are  to  be  attributed  to 
this  system,  has  no  support  whatever  in  the  facts,  for  the 
reason  that  the  direct  effect  of  such  acts  is  limited  to  such 
a  small  proportion  of  those  who  are  occupied  for  gain  as 
to  make  it  one  of  the  minor  or  lesser  factors  in  any  aspect 
of  the  case. 

Those  who  attribute  any  general  influence  upon  the 
rate  of  wages  to  the  stimulus  that  has  been  given  to  pro- 
tected industries,  even  admitting  that  the  effect  of  that 
stimulus  has  been  a  very  considerable  additional  develop- 
ment of  work  on  those  lines,  wholly  fail  to  take  note  of 
the  fact  that  we  pay  for  our  imports  with  our  exports. 


lOO  TAXATION  AND   WORK. 

The  rates  of  wages  in  the  production  of  what  we  export 
are  relatively  much  higher  than  they  are  in  the  conduct 
of  the  arts  which  have  been  stimulated  by  Protection. 
In  fact,  the  chief  argument  for  the  Protection  of  manu- 
factures has  been  the  high  rates  of  wages  which  could  be 
earned  in  the  conduct  of  agriculture.  Therefore,  no  one 
can  fail  to  admit  that,  so  far  as  an  obstruction  to  imports 
is  also  an  obstruction  to  exports,  the  results  might  be  a 
reduction  of  wages  rather  than  an  advance  in  the  rates. 
Such  I  think,  has  been  the  fact,  although  the  influence  of 
the  system  upon  wages  has,  I  think,  been  exaggerated 
on  both  sides. 

On  the  other  hand,  the  heavy  advance  in  the  rates  of 
wages  in  all  the  arts  that  have  not  been  subjected  to  the 
stimulus  of  the  tariff  while  the  cost  of  labor  in  each  unit 
of  product  has  been  reduced,  gives  conclusive  evidence 
that  the  influences  to  which  our  prosperity  may  be  attrib- 
uted are  something  wholly  outside  of  the  fiscal  policy  of 
the  country.  The  progress  of  the  country  can  rightly 
and  only  be  attributed  to  the  application  of  science  and 
invention  to  all  the  arts  in  which  we  excel, — to  the  de- 
velopment of  the  power  of  steam  and  electricity, — to  the 
reduction  in  the  cost  of  transportation,  both  by  land  and 
by  sea, — and  yet  more  than  all  to  the  continental  system 
of  free  exchange  among  the  people  of  the  several  States 
that  make  up  the  Union. 

It  may  be  judicious  to  give  one  example  of  the  potent 
forces  which  have  been  tending  to  a  reduction  in  the 
price  of  articles  of  prime  necessity,  accompanied  by  an 
advance  in  the  rate  of  wages,  by  reference  to  a  single 
incident.  In  a  discussion  upon  the  silver  question  at  a 
meeting  of  the  British  Association  for  the  Advancement 
of  Science  in  Manchester  in  September,  1887,  a  great 
deal  was  said  by  advocates  of  what  is  called  bi-metallism 


TARIFF  PROTECTION  DOES  NOT  RAISE   IVAGES.      lOI 

upon  the  injurious  effect  of  the  competition  of  India  on 
a  silver  basis  with  the  production  of  wheat  in  Great 
Britain  on  a  gold  basis,  it  being  assumed  that  the  dis- 
count on  silver  as  compared  to  gold  worked  as  a  premium 
upon  its  export  from  India  to  Great  Britain,  it  being 
also  alleged  that  silver  retained  its  old  purchasing  power 
in  India,  which  is  an  error.  I  ventured  to  call  the  atten- 
tion of  the  scientists  to  the  prime  importance  of  the 
competition  of  the  United  States  upon  a  gold  basis  in 
bringing  about  the  reduction  in  the  price  of  wheat  in 
Great  Britain,  and  I  remarked  that  such  had  been  the 
progress  in  invention  since  the  date  when  wheat  sold  for 
fifty  shillings  a  quarter  in  Mark  Lane,  as  to  have  made  a 
return  of  thirty-four  shillings  a  quarter  in  1887  quite  as 
profitable  to  the  grower  as  the  former  price  of  fifty  shil- 
lings. This  statement  raised  almost  a  storm  of  execration 
about  my  ears,  which  found  its  expression  in  the  London 
Times,  whose  editor  subsequently  declined  to  print  the 
proofs  which  I  subsequently  submitted  sustaining  my 
statement.  In  the  interval  between  1873  and  1887,  the 
self-binder  had  been  perfected  and  attached  to  the  reaper, 
thus  rendering  it  possible  to  harvest  an  immense  wheat  crop 
which  could  not  otherwise  have  been  gathered.  The  ex- 
port of  flour  had  to  a  considerable  extent  taken  the  place 
of  the  export  of  wheat,  while  the  railway  charges  and  the 
freight  by  steamer,  due  to  the  adoption  of  the  Bessemer 
rail  and  the  compound  marine  engine,  had  been  excessive. 
In  the  interval  between  1873  and  1887,  we  had  also  met 
all  the  difficulties  and  had  surmounted  them,  which  were 
connected  with  the  restoration  of  a  gold  standard  in  1879. 
Such  had  been  the  effect  of  the  application  of  science  and 
invention  that  the  railway  charge  for  fifteen  hundred 
miles  from  Minnesota  and  Dakota  to  the  seaboard  had 
been  reduced  eleven  shillings  per  quarter, — reduction  on 


I02  TAXATION  AND   WORK. 

steamship  charge  fiv'c  shilHngs, — the  reduction  in  the 
cost  of  phmting  and  reaping  two  shilHngs,  the  sum  saved 
in  milling  and  sacking  three  shillings,  and  the  reduction 
in  elevating  and  handling  one  shilling.  In  fact  there  had 
been  a  gain  between  1873  and  1887,  which  had  been 
divided  between  the  producer  and  the  consumer,  of 
twenty-two  shillings  per  quarter  of  eight  bushels  of  wheat. 
The  average  price  of  wheat  in  Mark  Lane,  for  the  years 
1870  to  1873  inclusive,  had  been  fifty-four  shillings  and 
ninepence  per  quarter.  Deduct  twenty-two  shillings  paid 
in  1873,  subsequently  saved  in  production  and  transpor- 
tation, and  there  was  left  thirty-two  shillings  and  nine- 
pence  as  the  average  return  to  the  American  farmer  on 
the  prices  of  1870  and  1874.  The  price  in  1887  was  about 
thirty-four  shillings,  which  left  the  American  farmer  a 
better  result  than  fifty-four  shillings  and  ninepence  had 
yielded  him  from  1870  to  1873. 

This  statement  was  bitterly  contested,  and  it  was  denied 
that  a  return  of  thirty-four  shillings  would  yield  any 
profit  to  the  American  farmer  in  1887.  The  Englishman 
could  not  believe  it. 

Since  that  date,  in  1887,  there  have  been  still  further 
reductions  in  all  these  charges,  while  the  price  of  wheat 
in  Mark  Lane  for  the  present  season  has  been  thirty-six 
shillings  per  quarter.  Wages  are  higher  on  the  farms  at 
the  present  time  than  they  were  in  1887  ;  the  cost  of  pro- 
duction and  distribution  is  lower. 

I  also  made  an  analysis  of  the  cost  of  the  production  of 
wheat  in  Rhenish  Prussia,  where  the  highest  rate  of  wages 
paid  the  farm  laborer  was  six  dollars  per  month,  the  aver- 
age rate  much  less,  but  the  cost  of  the  wheat  was  eighty 
cents  a  bushel.  The  cost  of  the  wheat  on  many  of  our 
Western  farms  at  four  times  this  rate  of  wages  is  less  than 
one-half  that  sum,  or  fortv  cents.     What  influence  has  the 


TARIFF  PROTECTION  DOES  NOT  RAISE    WAGES.      I03 

tariff  or  duty  upon  imports  upon  the  product  of  agriculture 
of  this  country,  except  to  obstruct  exports,  consideration 
being  given  to  these  potent  influences  of  other  kinds  ? 

The  number  of  persons,  workingmen  and  working- 
women,  and  others  whose  home  market  rests  wholly  upon 
the  demand  for  export,  is  larger  than  the  total  number  of 
persons  occupied  in  all  the  arts  of  which  any  part  could 
under  any  conditions  be  imported  from  a  foreign  country  ; 
the  two  bodies  of  working  people  together  constituting 
but  fifteen  to  seventeen  per  cent,  of  the  whole  number 
who  are  occupied  for  gain  in  all  the  work  of  this  country, 
the  proportion  varying  somewhat  year  by  year.  Is  it  not 
the  free  exchange  of  the  products  of  the  field,  the  farm, 
and  the  factory  among  the  people  of  our  land  which  is  of 
prime  importance  in  determining  the  abundance  of  the 
product,  the  rate  of  wages  derived  from  that  work,  and 
the  distribution  of  that  product  ? 

Those  who  fear  a  reduction  of  the  duties  as  well  as 
those  who  hope  for  a  reduction,  may  well  bear  in  mind 
that,  after  all  has  been  said,  the  tariff  system  is  only  one 
of  the  minor  and  not  one  of  the  major  forces  affecting 
the  condition  of  our  country.  I  am  the  more  careful  to 
press  this  point,  because  it  will  render  the  solution  of  all 
our  difificulties  much  easier  when  the  true  measure  of  the 
problem  is  fully  comprehended. 


CHAPTER  XVII. 

Protection  Promotes  War  ;  Free  Trade  Promotes 

Peace. 

By  the  admission  of  the  most  prominent  advocates  of 
the  present  system  of  high  duties  from  1861  to  1867,  and 
also  by  the  admission  of  the  Senators  whose  letters  have 
been  quoted,  it  has  been  proved  that  this  method  of  ap- 
plying the  protective  idea  is  not  based  upon  a  principle. 

It  is  not,  therefore,  "  an  admitted  truth  requiring  no 
further  proof,"  nor  is  it  "  a  rule  of  action  among  human 
beings."  A  high-tariff  system  represents  merely  a  policy 
of  which  the  purpose  is  to  give  another  direction  to  the 
common  rule  of  action  among  human  beings  than  men 
would  adopt  if  not  forced  to  do  so  by  tariff  taxation. 

The  declared  purpose  of  this  policy  is  either  to  raise  or 
to  maintain  the  rate  of  wages  above  the  rates  prevailing 
in  other  countries,  or  to  divert  capital  from  the  investments 
which  would  otherwise  be  chosen  by  its  owners  into  arts 
which  would  be  freely  chosen  were  there  no  such  policy 
of  taxation.  The  complement  or  correlative  of  such  laws 
are  those  of  a  precisely  similar  character  which  are  called 
for  by  workmen  for  limiting  the  hours  of  labor  and  regu- 
lating methods  of  payment.  All  these  acts  are  in  a  certain 
measure  socialistic  or  even  communistic  in  their  very 
essence. 

Free  Trade,  on  the  other  hand,  requires  no  force;  it  is 
what  men  engage  in  of  their  own  motive  and  for  the  joint 
benefit  or  mutual  benefit  of  both  buyer  and  seller.   It  is  true 

104 


PROTECTION  PROMOTES  WAR.  lO% 

to  the  definition  of  principle — it  is  "an  admitted  truth 
which  requires  no  further  proof,"  that  "  the  rule  of  action 
among  human  beings,"  who  have  risen  above  the  stage  of 
savagery,  is  to  trade  freely  ;  that  is  to  say,  to  exchange  pro- 
ducts with  each  other  for  mutual  benefit.  It  does  away  with 
distribution  by  war,  slavery,  and  force,  substituting  ex- 
change by  mutual  agreement  for  the  profit  of  both  buyer 
and  seller.  It  is  "  an  admitted  truth  which  requires  no 
further  proof,"  that  this  exchange  of  product  for  product  is 
an  exchange  of  service  by  which  men  help  each  other.  Free 
Trade  or  commerce  among  men  and  nations  tends  to  the 
maintenance  of  peace,  order,  and  industry.  Witness  the  re- 
lation of  the  Dominion  of  Canada  with  this  country  during 
the  civil  war.  It  fortunately  happened  that  before  the  civil 
war  a  treaty  of  mutual  reciprocity  in  trade  had  been  nego- 
tiated which  was  not  ended  until  after  the  struggle.  Under 
these  favorable  conditions  beneficial  to  both  countries — 
such  was  the  influence  that,  although  every  effort  was 
made  by  the  most  capable  agents  of  the  States  in  rebellion 
to  incite  Canada  to  attack  the  North,  not  one  single  regi- 
ment was  required  to  guard  our  northern  frontier,  and  not 
one  ship  of  war  was  required  to  be  stationed  before  the 
dominating  port  of  Halifax.  One  of  the  most  potent  ar- 
guments by  which  Chancellor  Caprivi  has  lately  carried 
the  treaties  of  reciprocity  between  the  German  Empire 
with  Austria,  Italy,  and  other  countries,  is  that  when  men 
exchange  products  with  each  other  they  may  not  fight. 
It  is  the  first  step  of  relief  from  the  standing  armies  that 
are  eating  out  the  very  heart  of  Europe. 

But  it  is  true  that  there  still  are  a  few  cranks  in  this 
country,  some  even  in  the  Senate  of  the  United  States, 
who  regard  commerce  as  a  sort  of  passive  international 
war;  men  seriously  object  to  the  import  of  what  they  call 
a  flood  of  foreign  luxuries,  upon  the  ground  that  such  an 


Io6  TAXATION  AND   WORK. 

import  is  a  warlike  attack  upon  our  domestic  industry,  re- 
gardless of  the  fact  that  the  greater  part  of  these  imports 
consists  of  the  necessaries  or  comforts  of  Hfe,  or  of  crude 
materials  of  foreign  origin  without  which  some  branches 
of  our  domestic  industry  would  be  destroyed. 

With  singular  fatuity,  these  legislators  are  among  the 
most  prominent  advocates  and  upholders  of  bounties  and 
subsidies  to  lines  of  steamships  connecting  the  United 
States  with  foreign  countries  ;  their  purpose  being  to  help 
the  United  States  inflict  the  injury  upon  them  from  which 
they  assume  to  defend  themselves,  i.c.^  to  flood  other 
countries  with  our  products;  that  is  to  say,  to  flood  Great 
Britain  with  our  cotton  and  our  grain,  and  to  flood  other 
nations  with  our  manufactured  goods  and  wares,  while 
refusing  to  accept  payment  for  our  surplus  products  in 
articles  which  are  of  foreign  production  that  we  need  in 
place  of  these  exports.  Surely  what  is  sauce  for  the  gan- 
der is  also  sauce  for  the  goose.  Yet  these  advocates  of 
bounties  are  the  very  men  who  hiss  at  a  reduction  of  our 
tariff,  and  who  impute  to  those  who  try  to  promote  com- 
merce without  bounties  a  dishonest  seeking  after  British 
gold.  Let  them  pass,  their  light  can  easily  be  hidden  un- 
der a  bushel  because  it  is  so  feeble. 

The  fallacy  which  underlies  this  crude  theory  of  trade 
is  the  same  as  the  misconception  which  has  led  to  the 
commercial  wars  of  the  last  three  centuries, —  the  false 
idea  that  a  country  profits  only  in  its  trade  when  it  im- 
ports gold  or  silver  in  exchange  for  goods ;  or  that  when 
it  imports  more  goods  than  it  exports  it  must  be  meeting 
with  a  loss.  It  is  no  longer  worth  while  to  waste  time  in  deal- 
ing with  such  persons,  because  as  fast  as  they  die  their 
places  are  taken  by  men  of  a  broader  type  and  of  greater 
intelligence,  and  also  because  with  them  it  is  useless  to 
discuss  this  question,  as  they  have  presented  these  falla- 


PROTECTION  PROMOTES  WAR.  10/ 

cies  until  they  have  become  incapable  of  reasoning  upon 
the  basis  of  facts. 

Suffice  it,  while  Protection  by  means  of  a  high  tariff  has 
only  been  defended  by  its  original  advocates,  as  a  tempora- 
ry expedient  or  policy  of  which  Free  Trade  is  the  ultimate 
end,  on  the  other  hand  Free  Trade  is  founded  upon  a  prin- 
ciple so  universal  and  so  fully  constituting  a  rule  of  action 
among  human  beings  that  it  always  has  and  always  will 
require  force  to  prevent  its  application. 

A  high  tariff  only  finds  its  justification  among  those 
who  regard  international  commerce  as  a  state  of  war,  while 
Free  Trade  is  sustained  by  its  advocates  because  it  pro- 
motes peace,  order,  and  industry,  good-will  and  plenty 
among  all  the  nations  of  the  world. 

Free  Trade  may  be  especially  desired  in  that  country  in 
which  science  and  invention  applied  to  the  greatest 
natural  resources  have  developed  the  largest  product  at 
the  lowest  cost  from  which  the  highest  rates  of  wages  are 
derived.  That  is  the  condition  of  this  country.  Our 
selfish  interest  is  in  Free  Trade  because  we  should  gain  the 
most  in  commerce  whatever  tariffs  other  nations  might 
oppress  themselves  with. 

It  is  this  aspect  of  the  case  that  lifts  the  discussion 
above  one  of  mere  profit  and  loss,  and  which  raises  it  to 
the  highest  plane  in  ethics  and  in  morals. 

While  the  intentions  of  the  advocates  of  what  is  mis- 
called Protection,  but  which  is  in  fact  privation,  are  doubt- 
less good,  they  are  of  the  same  kind  as  the  intention  with 
which  the  road  to  Sheol  is  said  to  be  paved,  and  in  their 
application  they  have  almost  made  a  Sheol  of  the  civilized 
world  for  about  four  centuries. 

It  would  perhaps  be  difficult  to  discriminate  between 
the  wars  which  have  been  conducted  in  the  name  of  reli- 
gion and  those  which  have  ensued   from  the  attempts  to 


I08  TAX  A  r/OAT  AND   WORK. 

restrict  commerce.  The  religious  wars  (God  save  the 
mark !)  of  France  and  Spain,  drove  the  Moors  and  the 
Moriscoes  with  their  arts  and  Hterature  into  Africa  and 
the  Huguenots  and  Flemings  to  England,  as  the  persecu- 
tion of  the  Jews  is  now  driving  the  traders  and  bankers 
of  Russia  from  her  soil,  thereby  turning  what  might  have 
been  only  the  ill-efTects  of  a  short  crop  into  a  famine. 

From  the  time  when  Columbus  discovered  the  West 
Indies,  or  when  Amerigo  Vespucci  discovered  America, 
down  to  the  present  date,  nearly  every  war  has  originated 
or  has  been  conducted  for  the  purpose  of  preventing 
one  nation  sharing  with  another  in  the  benefits  of  com- 
merce. 

The  efforts  of  France  and  Great  Britain,  through  the 
Berlin  decrees  of  Napoleon  and  the  Orders  in  Council,  to 
deprive  each  other  of  the  benefits  of  commerce,  first  com- 
pelled Napoleon  to  sell  Louisiana  to  this  country,  thus 
transferring  to  us  a  territory  which,  stretching  from  the 
Gulf  of  Mexico  to  the  borders  of  Canada,  will  presently  be 
the  dwelling-place  of  a  greater  people  than  will  occupy 
either  Great  Britain  or  France  ;  a  part  of  whose  commerce 
through  the  Sault  St.  Marie  Canal  that  unites  the  great 
lakes  even  now  exceeds  the  traffic  of  all  Europe  with  the 
East  through  the  Suez  Canal. 

The  end  of  all  these  wars  of  a  single  century  since  the 
French  Revolution  of  1793  has  been  that  France  has  been 
exhausted  in  her  efforts  to  depose  the  Bourbons  and  the 
Napoleonic  dynasty,  varying  her  efforts  to  govern  herself 
by  futile  attempts  to  prevent  the  union  of  the  people  of 
Germany  and  Italy. 

The  several  nations  of  the  world,  mainly  European 
nations,  whose  debts  are  recorded,  are  now  burdened  with 
a  national  debt,  of  which  the  aggregate  amount  is  $26,- 
621,222,135  net,  mostly  incurred  for  the  conduct  of  wars 


Pro  tection  promo  tes  war.  i 09 

undertaken  or  continued  mainly  for  the  restriction  of 
commerce.     This  debt  is  increasing. 

In  the  effort  to  prevent  commerce  among  about  twenty 
separate  States  occupying  the  continent  of  Europe,  of 
which  the  area,  omitting  the  frozen  regions  of  Europe  in 
the  one  case  and  Alaska  in  the  other,  is  about  the  same 
as  that  of  the  United  States,  taxes  are  raised  at  the  tariff 
barriers  amounting  to  about  $700,000,000,  while  armies 
numbering  over  3,000,000  men  in  active  service  are  kept  in 
camp  and  barracks  at  a  cost,  with  navies  added,  of  about 
$1,000,000,000.  As  the  result  of  this  system,  great  areas 
of  most  fertile  land  in  Eastern  Europe  are  lying  waste  ; 
Russia  is  famine-stricken ;  large  districts  in  Italy  are 
devastated  by  the  pellagra,  a  loathsome  disease  due  to 
the  want  of  adequate  nutrition  ;  the  people  of  Germany 
are  distinctly  under-fed  in  many  parts,  while  all  Europe  is 
dependent  in  part  upon  us  for  food. 

This  whole  waste  of  war  and  this  whole  condition  of 
abject  want  are  based  upon  and  caused  by  the  same  stu- 
pendous blunder  upon  which  the  McKinley  tariff  act  has 
been  promoted,  enacted,  and  is  now  sustained,  to  wit : 

That  interjiational  commerce  is  a  state  of  passive  zvar, 
and  that  in  the  exchange  of  products  tvhat  one  nation  gains 
another  must  lose. 

It  is  hard  to  maintain  a  judicial  frame  of  mind  in  dealing 
with  such  pagan  conceptions  which  belong  to  an  age  when 
men  were  just  emerging  from  what  John  Fiske  describes  as 
the  higher  stage  of  barbarism  that  precedes  civilization. 

It  may  not  be  that  this  error  will  be  removed  by  any 
process  of  reasoning,  or  by  any  mere  demonstration  of  the 
facts ;  the  remedy  has  come  from  the  profound  distrust 
of  the  very  misconceptions  on  which  this  whole  series  of 
arguments  and  acts,  culminating  in  the  McKinley  act,  are 
but  the  logical  development. 


I  lO  TAXA  TlOiV  ANB   WORK. 

The  intelligence  of  the  country  has  at  length  condemned 
the  whole  policy,  and  it  now  demands  to  be  governed  in 
its  legislation  by  those  who  represent  the  principle  of  Free 
Trade,  which  is  founded  upon  the  conception  of  mutual 
service,  under  the  guidance  of  men  who  will  put  principle 
above  policy  in  the  conduct  of  the  public  duties  with 
which  they  have  been  or  may  again  be  charged. 

On  the  other  hand, in  support  of  the  statement  which 
has  already  been  made,  that  the  effect  even  of  a  very  high 
tariff  system  has  been  exaggerated,  one  comparison  in 
figures  may  be  serviceable.  The  Statesman  s  Year  Book, 
for  1 89 1,  gives  the  customary  statements  of  the  imports 
and  exports  of  all  the  European  States,  the  colonies 
and  dependencies  of  Great  Britain,  and  the  nations  or 
States  of  North  and  South  America.  Disregarding  frac- 
tions, the  exports  of  Great  Britain  and  her  colonies  and 
dependencies  comes  to  six  thousand  million  dollars 
($6;ooo,ooo,ooo),  or  what  we  would  call  six  billions ; 
the  sum  of  the  imports  and  exports  of  all  the  other 
European  States  is  eight  thousand  million  dollars  ($8,000- 
000,000),  or  eight  billions ;  the  sum  of  the  imports  and 
exports  of  the  South  American  and  Central  American 
States  makes  thirteen  hundred  million  dollars  ($1,300,000,- 
000) ;  of  the  United  States  seventeen  hundred  million 
dollars  ($1,700,000,000) — total  three  billions.  The  aggre- 
gate of  the  international  commerce  of  all  the  countries, 
nations,  or  states  in  regard  to  which  the  facts  can  be 
ascertained,  is  seventeen  thousand  million  dollars  ($17,000,- 
000,000),  or  seventeen  billions.  The  product  of  the  United 
States  is  computed  at  twelve  thousand  five  hundred 
million  dollars,  of  which  perhaps  five  hundred  million 
dollars'  worth  may  be  consumed  upon  the  farms  or  by 
those  who  consume  the  goods  wliich  they  produce  them- 
selves.    The  rest  is  exchanged,  it  is  all  bought  and  sold. 


PROTECTIOf^  PROMOTES   WAR.  Ill 

A  single  transaction  or  one  exchange  of  this  product, 
therefore,  corresponds  for  purposes  of  comparison  to  the 
figures  of  the  import  and  export  in  international  com- 
merce. Our  domestic  transactions  on  a  single  exchange 
come  to  twenty-four  thousand  million  dollars  ($24,000,- 
000,000),  or  twenty-four  billions.  Our  export  and  import 
amounted  to  seventeen  hundred  million  dollars  ($1,700,- 
000,000),  therefore  constituting  on  single  transactions  a 
fraction  over  seven  per  cent,  of  our  commerce,  again 
bringing  into  conspicuous  notice  the  fact  that  the  domestic 
commerce  only  of  the  people  of  this  country  exceeds  the 
sum  of  all  the  international  commerce  of  all  the  nations 
of  the  earth  of  which  we  have  any  record. 

Again,  it  may  be  remarked  that  the  sum  of  the  railway 
charge  for  carrying  the  freight  only  over  the  railways  of 
the  United  States  now  amounts  annually  to  a  sum  but  little 
less  than  the  volume  of  our  exports  and  considerably 
exceeding  the  value  of  our  imports  from  foreign  countries. 

It  is  difficult  to  compute  the  measure  of  the  free  com- 
merce of  the  people  of  the  United  States  who  constitute 
a  more  numerous  body  occupying  a  wider  area,  than  were 
ever  before  permitted  to  enjoy  the  benefit  of  absolute  Free 
Trade. 

The  sum  of  our  exports  and  imports  combined  comes 
to  about  twenty-eight  dollars  per  head,  our  national  pro- 
duct is  not  far  from  two  hundred  dollars'  worth  per  head, 
of  which  a  single  exchange  would  represent  purchases  and 
sales  to  the  amount  of  four  hundred  dollars  each,  or  nearly 
fifteen  times  the  volume  of  foreign  trafific.  But  each 
element  in  our  product  is  dealt  in  many  times,  converted 
and  re-converted  until  it  is  ready  for  consumption,  so  that 
the  exchange  of  products  and  services  among  our  own 
people  cannot  be  less  than  three  times  the  first  value  of 
our  annual  product,  and  that  would  bring  the  sum  of  our 


112 


TAXATION  AND   WORK. 


domestic  transactions  to  the  incomprehensible  total  of 
$40,000,000,000  or  what  we  call  forty  billions  of  dollars 
in  this  present  year. 

Yet  there  are  those  among  us  who  would  debase  our 
standard  of  value  and  by  the  free  coinage  of  silver  dollars 
under  present  acts  of  legal  tender  would  endanger  this 
whole  traffic.  The  tax  which  would  be  put  upon  the  work 
of  this  people  by  substituting  a  dollar  which  is  only  worth 
sixty-eight  cents  after  it  is  melted,  in  place  of  a  dollar 
which  is  worth  after  it  is  melted  as  much  as  it  is  in  the 
coin — one  hundred  cents — would  be  so  disastrous  as  to 
put  the  McKinley  act  out  of  sight  and  out  of  mind. 


CHAPTER    XVIII. 
Does  Tariff  Protection  Promote  Liberty? 

It  may  be  asked  why  the  matter  of  the  tariff  should  at 
the  present  time  be  a  cause  of  disruption  of  existing 
parties  and  be  tending  toward  a  division  and  reconstruc- 
tion of  parties  on  new  Hues  ? 

The  reason  is  that  men  of  both  existing  parties  have 
combined  to  defeat  the  effort  to  protect  the  Httle  petty 
product  of  the  silver  mines  by  paying  for  it  more  than  it 
is  worth,  and  are  now  ready  to  combine  to  stop  the  effort 
to  give  bounties  to  the  producers  of  wool  and  pig-iron. 

This  latter  effort  will  be  brought  about  by  a  combination 
of  the  representatives  of  the  States  whose  products  de- 
pend on  the  sale  of  the  surplus  for  export  with  the  repre- 
sentatives of  States  that  will  no  longer  submit  to  taxation 
on  the  materials  which  are  necessary  in  their  manufact- 
ures. It  now  remains  to  develop  the  distinction  which  I 
have  made  in  the  relative  effect  of  duties  upon  imports, 
upon  our  exports. 

It  would  be  judicious  for  the  advocates  of  a  reform  of 
the  tariff  to  admit  that  when  the  so-called  protective  duty 
has  been  imposed  for  a  sufficient  length  of  time  upon  any 
article  of  foreign  origin,  for  the  production  of  which  we 
possess  equal  advantages  in  this  country  as  compared  to 
other  countries,  a  stimulus  may  be  given  to  that  specific 
branch  of  industry  and  it  may  be  subjected  to  such  urgent 
domestic  competition  as  to  cause  a  rapid  reduction  in  the 

"3 


114  TAXATTOiY  AND   WORK. 

price  of  that  article.  That  is  the  reason  why  many 
branches  of  industry  which  liave  been  subjected  to  the 
unwholesome  stimuhis  of  a  high  tariff  have  been,  on  the 
whole,  the  cause  of  more  loss  to  the  investors  than  a  source 
of  profit.  The  worst  kind  of  competition  to  which  a 
skilful  manufacturer  can  be  subjected,  is  the  forced  com- 
petition of  people  who  are  not  capable  of  conducting  the 
business  but  who  are  induced  to  go  into  it  by  a  protective 
bounty  or  preference. 

Yet  the  only  ground  on  which  this  system  is  justified 
is  that  which  has  been  presented  in  the  recent  tariff  cases 
brought  before  the  Supreme  Court.  The  law  officers  of 
the  government  justified  not  only  the  protective  system 
but  direct  bounties  to  the  sugar-planters  upon  the  ground 
that  the  power  vested  in  Congress  to  enact  such  a  measure 
was  ample  and  complete  under  the  general  provision  of 
the  Constitution,  that  Congress  may  legislate  "  for  the 
general  welfare."  While  it  is  true  that  the  court  did  not 
render  any  decision  directly  affecting  the  bounties  to  the 
sugar-planters,  its  decision  on  the  whole  sustained  the 
ground  presented  by  the  law  officers  of  the  government. 

That  argument  was  in  these  terms  in  the  briefs  of  the 
Attorney-  and  Solicitor-Generals  who  represent  the  present 
administration  : 


"  The  sugar-bounty  clause  was  for  the  purpose  of  encouraging  the  produc- 
tion of  raw  sugar  in  this  country." 

"  It  may  be  conceded  that  the  bounty  must  be  paid  out  of  the  Treasury 
of  the  United  States  from  funds  raised  by  taxation,  and  therefore  that, 
unless  Congress  has  power  to  levy  a  tax  for  the  purpose  of  paying  the  bounty, 
an  appropriation  for  a  bounty  is  beyond  its  power." 

"  Congress  has  power  therefore  to  levy  duties  for  the  purpose  of  ])roviding 
for  the  general  welfare  of  the  United  States.  It  has  been  held  in  a  number 
of  cases,  upon  which  the  appellants'  counsel  rely,  that  taxation  must  be  for 
a  public  purpose,  and  therefore  that,  where  it  is  proposed  by  a  municipal 
corporation  to  pay  money  or  lend  credit  to  a  private  individual  or  comjiany 


DOES    TARIFF  PROTECTION  PROMOTE  LIBERTY?        I  15 

as  an  inducement  to  the  construction  of  works  within  the  limits  of  the 
municipal  corporation,  the  remote  consequences  of  benefit  to  the  people  of 
that  corporation  are  not  sufficient  to  make  the  purpose  of  the  donation  a 
public  one,  and  laws  authorizing  the  same  are  void." 

After  quoting  the  cases  cited  against  them,  the  law 
officers  of  the  government  then  proceed  with  their  argu- 
ment in  the  following  terms : 

"  The  foregoing  do  not  include  all  the  cases  on  the  subject,  but  they  are 
sufficient  to  show  the  principle  which  the  appellants  here  invoke  to  invalidate 
the  bounty  clause  under  consideration.  We  respectfully  submit  that  they 
have  no  application  in  this  controversy.  They  are  all  of  them  cases  of 
municipal  taxation  which  must  be  for  public  municipal  purposes.  It  is 
obvious  that  the  establishment  of  a  particular  industry  in  one  place  by  a 
bonus  to  specified  private  individuals  is  a  very  different  object  for  taxation 
than  the  encouragement  by  the  national  government  of  a  widespread  industry 
in  many  quarters  of  the  Union  for  national  purposes,  with  a  view  to  diversify- 
ing the  industries  of  the  country  and  making  it  independent  of  other 
countries  for  necessities." 

"  The  principle  was  laid  down  in  the  case  of  Lowell  vs.  Boston,  supra, 
that  a  purpose  was  not  a  public  purpose  because,  by  affecting  the  private 
interests  of  a  great  many  individuals,  it  would  ultimately  affect  the  public 
weal.  With  respect  to  municipalities  and  States  that  can  have  no  interna- 
tional relations,  this  is  undoubtedly  true,  but  the  subject  assumes  a  very 
different  aspect  when  treated  from  the  standpoint  of  the  collective  industries 
of  a  nation  in  competition  with  and  in  relation  to  tlie  industries  nf  other 
nations." 

"  Such  national  action  is  required  to  offset  the  encouragement  of  the  same 
industry  in  other  countries,  lest  thereby  we  be  made  altogether  dependent 
for  the  supply  of  a  necessity  upon  countries  thus  far  removed." 

"  The  Second  Act  of  the  first  Congress  of  the  United  States,  approved 
July  4,  1789,  was  an  act  imposing  duties,  which  expressly  recited  its  purpose 
to  be  the  protection  and  encouragement  of  manufactures.  The  recital  is  as 
follows : 

"  '  Sec.  I.  Whereas  it  is  necessary  for  the  support  of  government,  for  the 
discharge  of  the  debts  of  the  United  States,  and  the  encouragement  and 
protection  of  manufactures,  that  duties  be  laid  upon  goods,  wares,  and  mer- 
chandise imported,  be  it  enacted,  etc.  (I  Stats.,  24).' 

"  The  principle  thus  established  necessarily  justifies  bountieii,  for,  in  the 
beginning  of  the  operation  of  a  protective  tariff  the  amount  of  duty  levied 


I  1 6  TAXA  TION  AND   WORK. 

is  a  bounty  to  the  domestic  manufacturer,  and  it  is  with  a  view  to  such  a 
benefit  for  him  that  it  is  levied.  The  sugar  duties  have  always  had  the 
effect  of  a  bounty  to  domestic  sugar  producers.    .     .     . 

"  The  question  of  the  validity  of  bounties  is  thus  as  old  as  that  of  the 
protective  tariff,  and  has  been  answered  in  the  same  way  by  constant  legisla- 
tive and  executive  action,  in  accordance  with  the  views  of  that  ablest  of 
statesmen  and  jurists  who  penned  the  Report  on  Manufactures.    .     .     . 

"  If  a  century's  construction  of  the  Constitution  by  Congress  is  binding 
on  the  courts,  then  the  question  of  the  power  to  tax  for  a  bounty  to  particu- 
lar industries  is  no  longer  an  open  one.  .     . 

"  A  course  of  legislation  and  an  acquiescence  of  the  people  as  old  as  the 
nation  itself  has  sanctioned  both  direct  and  indirect  bounties  for  the  encour- 
agement of  those  industries  which  are  closely  allied  with  national  growth 
and  national  independence,  as  a  public  purpose  and  within  the  power  of 
Congress.    ... 

"We  have  been  discussing  heretofore  the  validity  of  the  bounty  features  of 
the  sugar  clause  on  the  theory  that  provision  of  this  sort  was  for  the  general 
welfare.  There  is  another  ground  upon  which  it  can  be  supported.  All  the 
authorities  agree  that  the  government  may  recognize  a  moral  obligation  to 
any  class  of  citizens  by  direct  appropriation,  though  the  claim  is  not  based  on 
strictly  legal  grounds.    .     .     . 

"  Here  was  a  case  where  citizens,  by  reason  of  heavy  sugar  duties  which 
had  existed  for  many  years,  had  been  induced  to  make  large  investments  in 
the  plant  required  for  the  production  of  sugars  ;  and  now  it  was  proposed  by 
Congress  to  remove  the  duties  because  the  revenue  which  they  produced  was 
more  than  sufficient  for  the  use  of  the  Government.  The  removal  of  duties 
would  absolutely  destroy  fifty  or  sixty  million  dollars'  worth  of  property  in- 
vested in  this  industry  and  protected  by  the  duties.  To  enable  persons  whose 
property  would  be  thus  injuriously  affected  to  prepare  for  the  change,  the 
Government  was  under  a  moral  ol^ligation  to  reimburse  them  for  their  loss 
or  permit  them  by  a  bounty  to  continue  the  business  until  such  time  as  the 
'  business  might  be  self-sustaining." 

It  will  be  observed  that,  so  far  as  the  Supreme  Court 
sustained  this  construction  of  the  powers  of  the  National 
Congress,  it  held  that  the  principle  laid  down  by  Justice 
Miller  in  Loan  Association  vs.  Topeka,  which  I  have  pre- 
viously cited,  does  not  govern. 

The  principle  was  that  "  To  lay  the  hand  of  the  Govern- 
ment on  the  property  of  the  citizen,  and  with  the  other 


DOES   TARIFF  PROTECTION  PROMOTE  LIBERTY?        WJ 

bestow  it  upon  favored  individuals  to  aid  private  enter, 
prises  is  none  the  less  robbery  because  it  is  done  under 
the  forms  of  law  and  is  called  taxation." 

In  defence  of  the  McKinley  act  the  law  officers  of  the 
present  administration  sustained  the  right  of  Congress  to 
commit  this  robbery  under  the  forms  of  law,  but  the 
court  did  not  give  a  decision  upon  that  branch  of  the  case. 
That  issue  may  be  raised  directly  at  some  future  time. 

It  follows  of  necessity  that,  under  the  pretext  of  Pro- 
tection, any  and  all  persons  in  the  United  States  may  be 
taxed  by  the  Congress  of  the  United  States  for  the  bene- 
fit of  any  single  class  of  persons  that  any  Congress  may 
select  for  a  bounty. 

If  this  position  is  sustained  when  the  direct  question 
of  a  bounty  is  adjudicated,  it  will  follow  that  the  legis- 
lative powers  of  the  Congress  of  the  United  States  may 
be  misused  without  limit.  Any  tax  to  support  any 
undertaking  which  a  temporary  majority  of  Congress 
may  declare  to  be  for  the  common  welfare  must  be 
held  to  be  for  a  public  purpose,  and  so  far  as  the  Court 
has  yet  passed  upon  this  claim,  it  has  declared  itself 
to  be  no  longer  a  co-ordinate  branch  of  the  government, 
and  that  after  such  bounty  has  been  paid  for  a  certain 
period  the  recipients  secure  a  vested  right  in  the  proceeds 
of  taxation  which  the  Supreme  Court  is  powerless  to 
abate. 

It  would  also  appear  that  the  powers  of  the  Congress  of 
the  United  States  are  supreme — even  greater  than  those 
of  the  Parliament  of  Great  Britain  in  spite  of  the  assumed 
restrictions  of  our  written  Constitution. 

This  renders  the  discussion  of  the  tariff  system  as  a 
matter  of  principle  yet  more  imperative  upon  the  people 
of  this  country,  for  the  reason  that  where  Protection 
begins  revenue  ends.     That  is  to  say,  if  a  tax  is  levied 


I  1 8  TAX  A  TION  AND   WORK. 

upon  ;i  forcij^n  import  that  so  raises  the  cost  of  that  im- 
port to  the  consumer  as  to  make  it  expedient  for  him  or 
any  one  else  to  undertake  the  manufacture  of  a  domestic 
product  of  hke  kind, — then,  as  a  matter  of  course,  the 
import  of  that  article  ceases,  and  the  revenue  which  had 
been  derived  from  that  import  ends. 

Now  it  will  be  observed  that  the  so-called  principle  of 
"  Protection  with  incidental  Revenue,"  and  the  effect  of 
the  McKinley  act,  which  is  based  upon  that  idea,  is  to 
remove  the  duties  upon  imports  of  articles  that  cannot  in 
the  judgment  of  Congress  be  produced  in  the  United 
States  at  equal  advantage  with  other  countries. 

On  the  other  hand,  the  so-called  principle  and  the  pur- 
pose of  the  McKinley  act  is  to  put  the  rate  of  duty  so 
high  that  everything  which,  in  the  judgment  of  Congress, 
can  be  produced  in  this  country  shall  be  manufactured 
here,  so  as  to  stop  the  import  of  foreign  goods  of  like 
kind.  It  follows  of  necessity  that  if  the  double  purpose 
of  this  act  could  be  carried  into  effect,  all  revenues  from 
duties  upon  imports  would  cease,  and  that  would  render 
a  resort  to  a  direct  tax  for  the  support  of  the  Government 
an  absolute  necessity. 

This  policy  is  therefore  based  upon  the  idea  that  the 
voters  of  this  country  will  surely  elect  members  of  Con- 
gress who  will  be  more  competent  than  the  voters  them- 
selves to  determine  what  branches  of  industry  may  be 
rightly  and  profitably  undertaken  in  this  country,  and 
what  may  not.  The  fallacy  of  this  conception  was  never 
more  completely  exhibited  than  by  Daniel  Webster  when 
he  defended  Free  Trade  upon  principle  before  he  had 
become  a  mere  advocate  of  the  policy  of  Protection  in  his 
later  years. 

In  the  great  meeting  held  in  Faneuil  Hall  in  1820  he 
used  these  words  : 


DOES    TARII-F  PROTECTION   PROMOTE   LIBERTY?        I  I9 

"  It  would  hardly  be  contended  that  Congress  possessed  that  sort  of 
general  power  by  which  it  might  declare  that  particular  occupations  should 
be  pursued  in  society,  and  that  others  should  not.  If  such  power  belonged 
to  any  government  in  this  country,  it  certainly  did  not  belong  to  the  gen- 
eral government.  The  question  was,  therefore,  and  he  thought  it  a  very 
serious  question,  whether,  in  laying  duties  under  the  authority  to  lay  imposts, 
obviously  given  for  the  purpose  of  revenue,  Congress  can  reasonably  and 
fairly  lose  sight  of  those  purposes  entirely,  and  levy  duties  for  other  objects. 
Congress  may  tax  the  land,  but  it  would  be  a  strange  proposition  if  Congress 
should  be  asked  to  lay  a  land  tax  for  the  direct  purpose  of  withdrawing 
capital  from  agriculture  and  sending  those  engaged  in  it  to  other  pursuits. 
The  power,  however,  exists  in  the  one  case  as  much  as  in  the  other.  It  is 
not  easy,  it  must  be  confessed,  to  draw  a  limit  in  such  cases,  and  therefore, 
perhaps,  it  must  be  presumed  in  all  cases  that  the  power  was  exercised  for 
the  legal  purpose,  the  collection  of  revenue,  and  that  whatever  other  conse- 
quences ensued  must  be  regarded  as  incidental  and  consequential  to  the 
exercise  of  the  power.  Still,  it  was  a  question  very  fit,  in  his  judgment,  to 
be  considered  by  Congress,  whether  it  was  a  fair  and  just  exercise  of  power 
to  elevate  the  incidental  far  above  the  primary  object,  or,  to  speak  more 
properly,  to  pursue  the  latter  in  utter  disregard  of  the  former. 

"To  individuals  this  policy  is  as  injurious  as  it  is  to  government.  A 
system  of  artificial  government  protection  leads  the  people  to  too  much  reli- 
ance on  government.  If  left  to  their  own  choice  of  pursuits,  they  depend  on 
their  own  skill  and  their  own  industry.  But  if  government  essentially  affects 
their  occupations  by  its  systems  of  bounties  or  preferences,  it  is  natural, 
when  in  distress,  that  they  should  call  on  the  government  for  relief.  Hence 
a  perpetual  contest  carried  on  between  the  different  interests  of  society. 
Agriculturists  taxed  to-day  to  sustain  manufacturers  ;  commerce  taxed 
to-morrow  to  sustain  agriculture  ;  and  then  impositions,  perhaps,  on  both 
manufactures  and  agriculture  to  support  commerce.  And  when  government 
has  exhausted  its  invention  in  these  modes  of  legislation,  it  finds  the  result 
less  favorable  than  the  original  and  natural  state  and  course  of  things.  He 
could  hardly  conceive  of  anything  worse  than  a  policy  which  should  place 
the  great  interests  of  this  country  in  hostility  to  one  another — a  policy  which 
should  keep  them  in  constant  conflict  and  bring  them  every  year  to  fight 
their  battles  in  the  committee  rooms  of  the  House  of  Representatives  in 
Washington." 

It  is  manifest  that  even  though  Webster  was  the  great 
defender  of  the  Constitution  and  the  representative  of  a 
party  that  carried  its  conception  of  the  Federal  power  to 


I20  TAXATION  AND   WORK. 

ail  extreme,  even  he  never  dreamed  of  handing  over  the 
supreme  power  of  Congress  to  the  domination  of  the 
representatives  of  three  petty  branches  of  industry,  such 
as  Silver,  Pig-Iron,  and  Wool,  by  whom  the  Government 
has  of  late  been  controlled  and  in  whose  administration 
of  power  no  man  in  the  whole  country  possesses  any 
rights  of  property  which  a  Congress  so  dominated  and 
controlled  is  bound  to  respect. 

The  reaction  has  come,  and  it  will  very  soon  appear 
that  this  is  a  democratic  country  whose  legislation  is  to 
be  governed  by  the  people  for  the  people,  and  that  no 
tax  shall  be  levied  which  the  Government  does  not  receive 
and  docs  not  also  retain  for  the  public  service  only. 

It  may  now  be  expedient  to  deal  with  and  to  define  the 
principle  of  Free  Trade,  construing  words  as  they  are 
given  in  the  dictionary.  Free  Trade  is  but  a  synonym 
for  Liberty.  Liberty  is  defined  as  the  state  of  a  free 
man.  In  support  of  this  proposition  we  may  cite  a  defi- 
nition of  Liberty  given  in  one  of  the  highest  courts  of 
our  land  by  one  of  our  greatest  jurists. 

In  People  vs.  Gilson,  N.  Y.  Reports,  Vol.  109,  p.  389, 
1888,  Judge  Peckham  gave  abroad  and  lucid  construction 
to  the  word  liberty  in  deciding  adversely  upon  a  statute 
by  which  the  Legislature  of  New  York  had  attempted  to 
interfere  with  the  freedom  of  trade  among  its  own  citizens. 

The  learned  Judge  ruled  that : 

"  The  term  liberty  as  used  in  the  Constitution  is  not  dwarfed  into  mere 
freedom  from  physical  restraint  of  the  person  of  the  citizen  as  by  incarcera- 
tion, but  it  is  deemed  to  embrace  the  right  of  man  to  be  free  in  the  enjoy- 
ment of  his  faculties  with  which  he  has  been  endowed  by  the  Creator, 
subject  only  to  such  restraints  as  are  necessary  to  the  common  welfare. 
Liberty  in  its  broad  sense,  as  understood  in  this  country,  means  not  only  the 
right  to  freedom  from  servitude,  imprisonment,  or  restraint,  but  the  right  of 
one  to  use  his  faculties  in  all  lawful  ways,  to  live  and  work  where  he  will,  to 
earn  his  livelihood  in  any  lawful  calling,  and  to  pursue  any  lawful  trade  or 
vocation." 


DOES    TARIFF  PROTECTION  PROMOTE  LIBERTY?        121 

In  the  application  of  this  principle  of  liberty,  we  may 
now  put  in  quotation  marks  the  definitions  which  are 
either  to  be  found  in  the  dictionary  or  in  the  decisions  of 
the  highest  courts  of  our  land  with  the  exception  of  the 
Supreme  Court. 

A  principle  is  "  a  settled  law  or  rule  of  action  in  human 
beings."  The  principle  on  which  the  nation  is  founded 
is  that  of  Liberty.  The  Constitution  assures  to  every 
citizen  the  right  of  "  life,  liberty,  and  the  pursuit  of  happi- 
ness." Liberty  is  "  the  state  of  a  free  man."  To  be  free 
is  to  be  "  rid  of  that  which  confines,  limits,  embarrasses, 
oppresses,  and  the  like."  Liberty  in  its  broad  sense  is  the 
right  of  one  to  use  his  faculties  in  all  lawful  ways,  to  live 
and  work  where  he  will,  to  earn  his  livelihood  in  any 
lawful  calling,  and  to  pursue  any  lawful  trade  or  vocation. 
Trade  is  "  the  act  or  business  of  exchanging  commodities 
by  barter  or  of  buying  and  selling  for  money."  Free 
Trade  is  therefore  "  the  buying  and  selling  of  commodi- 
ties "  without  being  subject  to  acts  which  "  confine,  limit, 
embarrass,  or  oppress." 

In  the  exercise  of  Free  Trade  the  citizen  is  entitled  to 
Protection  which  is  "  preservation  from  loss,  injury  or  an- 
noyance "  in  his  undertaking  to  "  earn  his  livelihood  in 
any  lawful  calling  and  to  pursue  any  lawful  vocation." 

The  citizen  cannot  be  deprived  of  the  right  to  Free 
Trade  by  any  act  which  "  limits,  embarrasses  or  oppresses 
him,"  or  by  "  taxation,  except  for  a  public  purpose,"  the 
Supreme  Court  when  dealing  directly  with  the  rights  of 
citizens  having  rendered  a  decision  that  "  to  lay  the  hand 
of  the  government  on  the  property  of  the  citizen  and 
with  the  other  bestow  it  upon  favored  individuals  to  aid 
private  enterprises,  is  none  the  less  robbery  because  it  is 
done  under  the  forms  of  law  and  is  called  taxation." 

The  levy  of  a  "  duty  "  upon  foreign  imports  is  to  im- 


122  TA  XA  TION  A  ND  J  VORK. 

pose  a  "  tax,  toll,  impost,  or  custom."  A  tax  is  a  "  rate  or 
sum  of  money  assessed  on  the  person  or  the  property  of  a 
citizen  by  government  for  the  use  of  the  nation  or  State  " 
which  cannot  lawfully  be  used  for  any  private  purpose. 

The  effect  of  a  tariff  for  what  is  miscalled  "  Protection  " 
is  to  "  limit,  embarrass,  and  oppress  "  the  citizen  in  the 
pursuit  of  his  lawful  "  trade  or  vocation  "  for  the  purpose 
of  "  laying  the  hand  of  the  government  on  the  property 
of  the  citizen,  and  with  the  other  bestow  it  on  private  in- 
dividuals ; "  or,  in  other  words  to  levy  a  tax  which  is  not 
for  the  use  of  the  government. 

The  policy  of  Protection  under  such  acts  as  the  Mc- 
Kinley  act,  when  rightly  defined  is,  therefore,  a  policy  of 
privation.  Free  Trade  qualified  by  the  taxation  of  im- 
ports in  order  to  raise  a  revenue  for  public  purposes  only, 
is  the  right  of  every  citizen. 

It  may  therefore  be  the  duty  of  every  citizen,  without 
distinction  of  party,  to  vote  only  for  members  of  Con- 
gress who  will  so  adjust  the  duties  upon  imports  that  all 
taxes  that  the  people  pay  the  government  shall  receive. 


CHAPTER    XIX. 

Progressive  Reduction  of  Duties. 

It  has  been  demonstrated  that  if  it  were  possible  to 
carry  the  purposes  of  the  McKinley  act  into  effect  by  im- 
porting free  of  duty,  all  the  things  that  we  cannot  produce 
to  advantage,  and  by  putting  a  prohibitive  duty  upon  all 
articles,  which,  in  the  judgment  of  any  Congress  could  be 
produced  to  advantage  in  this  country,  the  result  of  that 
policy  would  correspond  to  the  result  that  would  be  at- 
tained by  the  application  of  what  is  called  "  British  Free 
Trade  "  to  the  commerce  of  the  United  States — namely, 
all  revenue  would  cease  under  such  a  tariff,  except  on 
liquors  and  tobacco,  our  revenue  would  be  derived  mainly 
from  our  excise  on  liquors  and  tobacco,  supplemented  by 
an  income  tax,  or  by  direct  taxation.  The  fact  is,  however, 
that  the  purpose  of  the  McKinley  act  cannot  be  realized, 
and  the  conception  upon  which  it  is  based  of  ''  Protection 
with  incidental  Revenue  "  is  incapable  of  application  to 
our  commerce. 

We  have  been  saved  from  the  complete  destruction  of 
our  commerce  except  in  sugar  and  some  other  relatively 
unimportant  articles  with  a  consequent  prohibition  of  the 
greater  part  of  our  exports,  by  the  incapacity  of  the 
dominating  party  to  put  their  intention  into  effective 
action. 

It  already  appears  that  import  of  many  articles  which 
it  was  the  intention  of  the  McKinley  act  to  exclude,  is 

123 


124  TAXATION  AND    WORK. 

increasing  at  the  present  time.  Nearly  one  half — 48 
per  cent. — of  the  woollen  and  worsted  fabrics  which  are 
consumed  by  the  people  of  the  United  States  are  made 
either  in  this  or  some  other  country  from  wools  grown  in 
a  foreign  country.  It  may  be  asserted  without  fear  of 
disproof,  that  the  people  of  the  United  States  are  pro- 
portionately clothed  in  larger  measure  with  the  products 
of  foreign  countries  than  they  were  one  hundred  years 
ago  when  Alexander  Hamilton  bore  testimony  to  the 
common  wear  of  domestic  fabrics  by  the  people  of  that 
period. 

Again,  it  does  not  appear  that  the  futile  attempt  to 
establish  the  manufacture  of  tin-plates  in  this  country 
has  yet  been  met  by  any  measure  of  production  even 
equal  to  the  increase  of  the  requirements  of  the  present 
year  as  compared  to  other  years ;  nor  can  any  evidence 
be  obtained  that  measures  are  in  progress  for  beginning 
with  the  sheet  metal  and  ending  with  the  tin-plate  that 
will,  within  any  computable  period,  assure  any  considera- 
ble supply  of  tinned  iron  or  steel  wholly  of  domestic 
manufacture. 

The  evidence  has  also  been  submitted  that  so  far  as  the 
future  course  of  reform  may  be  predicated  upon  the  past, 
the  Congress  which  is  to  be  elected  in  November  1892,  to 
meet  in  its  first  session,  December  1893,  will  meet  the 
following  conditions  : — Applications  for  pensions  under 
the  existing  laws  will  have  been  so  far  examined  and 
audited  that  the  need  of  an  appropriation  to  meet  the 
first  payments  of  pensions  granted  will  have  substantially 
ceased.  The  payment  of  the  annual  pension  roll  will 
then  be  less  than  one  hundred  million  dollars  and  will  be 
subject  to  rapid  reduction  under  existing  acts. 

On  the  other  hand,  the  revenue  which  will  then  be 
derived  from  liquors  and  tobacco  under  existing  laws  will 


PROGRESSIVE  REDUCTION  OF  DUTIES.  I25 

be  very  considerably  more  than  the  appropriation  which 
will  be  made  by  the  present  Congress,  except  pensions, 
and  will  be  more  than  sufficient  to  meet  all  the  expendi- 
tures which  will  be  authorized  under  such  appropriations 
for  all  purposes  except  pensions. 

It  will  follow  that  there  will  be  at  that  time  an  excess 
of  revenue  from  liquors  and  tobacco  above  all  other  ex- 
penditures which  may  be  applied  to  the  pensions.  This 
excess  of  revenue  from  liquors  and  tobacco  will  certainly 
cover  the  few  first  payments  of  applicants  which  may  not 
then  have  been  passed  upon,  and  it  will  be  very  sure  to 
yield  also  a  surplus  to  be  applied  to  the  pension  roll  it- 
self. Therefore  the  legislation  of  the  Congress  about  to 
be  chosen  will  be  limited  to  providing  less  than  one  hun- 
dred million  dollars  from  duties  upon  all  imports,  except 
liquors  and  tobacco. 

We  may  now  revert  to  the  official  statement  of  the  rev- 
enue from  duties  which  was  given  in  detail  in  the  third 
chapter  of  this  series  of  treatises.  From  that  we  may 
then  undertake  to  select  a  list  of  the  imports  to  be  sub- 
ject for  taxation,  from  which  an  ample  revenue  may  be 
derived  without  any  undue  interference  with  the  freely 
chosen  pursuits  of  the  people.  In  making  this  selection 
one  may  rightly  revert  to  the  rule  which  was  laid  down 
by  Sir  Robert  Peel  in  dealing  with  a  similar  condition 
which  was  given  in  Chapter  VII.,  namely: 

"  If  we  had  to  deal  with  a  new  society,  in  which  those  infinite  and  com- 
plicated interests  which  grow  up  under  institutions  like  those  in  the  midst  of 
which  we  live,  had  found  no  existence,  the  true  abstract  principle  would  be 
'  to  buy  in  the  cheapest  market  and  to  sell  in  the  dearesf.'  And  yet  it  is 
quite  clear  that  it  would  be  utterly  impossible  to  apply  that  principle  in  a 
state  of  society  such  as  that  in  which  we  live  without  a  due  consideration  of 
the  interests  which  have  grown  up  under  the  protection  of  former  laws. 

"  While  contending  for  the  justice  of  the  abstract  principle,  we  may  at 
the  same  time  admit  the  necessity  of  applying  it  jiartially.     I  think  that  the 


1 26  TAX  A  TION  AND   WORK. 

proper  object  is  first  to  lay  the  foundation  of  good  laws,  to  provide  the  way 
for  gradual  improvement  which  may  thus  be  introduced  without  giving  a 
shock  to  existing  interests.  If  you  do  give  a  shock  to  those  interests,  you 
create  prejudice  against  the  principles  themselves  and  only  aggravate  the 
distress.  This  is  the  principle  on  which  we  attempted  to  proceed  in  tlie 
preparation  of  the  tariff." 

If  we  apply  these  considerations  to  our  own  case,  it 
will  appear  that  the  direction  of  the  investment  of  a  large 
amount  of  capital  has  been  very  considerably  changed  by 
the  long  existence  of  a  high  tariff,  but  it  has  been  proved 
that  the  duties  on  crude  and  on  partly  manufactured 
materials  may  all  be  removed  without  any  injury,  but  on 
the  contrary  with  actual  benefit  to  the  producers  on  iron 
and  wool,  while  at  the  same  time  giving  relief  to  manu- 
facturers who  convert  these  materials  into  form  for  con- 
sumption. 

Again,  it  may  be  remarked,  that  there  are  certain 
articles  taxed  under  the  head  of  Class  A,  Food  and  Live 
Animals — such  as  fruits,  including  nuts  upon  which  it 
may  be  wholly  suitable  to  retain  duties  for  revenue  pur- 
poses only  so  long  as  it  may  be  expedient  to  do  so. 
Fruits  and  nuts  are  not  necessaries  of  life,  and  if  it  is 
expedient  to  tax  them  for  the  payment  of  revenue  one 
surely  cannot  object  to  that.  They  yield  over  four  million 
dollars  of  revenue.  All  the  rest  of  the  taxes  upon  crude 
and  partly  manufactured  materials,  according  to  the 
figures  of  1 891  may  be  removed,  and  yet  at  the  rates  of 
duties  imposed  in  that  year  on  Class  D,  comprising  manu- 
factured articles  ready  for  consumption,  and  Class  E, 
articles  of  voluntary  use  and  luxuries,  with  the  four  mil- 
lion dollars  from  fruit  and  nuts  added  the  revenue  would 
be  one  hundred  and  ten  million  dollars,  which  is  in  ex- 
cess of  what  will  be  required  by  at  least  twenty  millions. 

It  may,   however,  be  remarked,  that  when   the  duties 


PROG  RE  SSI  VE  RED  UC  TION  OF  DU  TIES.  1 2  J 

upon  the  materials  which  enter  into  the  processes  of 
manufacturing  textile  fabrics  and  articles  made  of  metal 
have  been  wholly  removed,  there  may  be  and  probably 
will  be  a  considerable  reduction  in  the  import  of  the 
finished  articles,  in  which  crude  iron,  steel,  and  wool  are 
component  materials  of  chief  value.  We  shall  then  excel 
many  other  nations  in  the  production  of  nearly  all  the 
finished  fabrics  in  which  these  materials  are  consumed  of 
which  we  now  import  a  very  considerable  part.  There- 
fore, except  for  the  increase  of  population,  a  falling  off 
in  the  revenue  from  finished  fabrics  might  be  looked  for. 
But,  on  the  other  hand,  the  increased  prosperity  which 
must  ensue  from  the  promotion  of  manufactures  under 
such  a  policy,  coupled  with  the  very  large  increase  in  ex- 
ports which  will  ensue  from  the  adoption  of  that  policy 
must  greatly  increase  the  consumption  of  foreign  as  well 
as  domestic  fabrics  which  are  not  articles  of  necessary  use, 
especially  when  the  duties  on  foreign  imports  are  reduced 
in  proportion  to  the  duties  which  have  been  taken  from 
the  materials.  It  follows,  as  a  matter  of  course,  that  by 
the  careful  selection  of  manufactured  articles  and  articles 
of  voluntary  use,  luxuries,  for  revenue  duties,  etc.,  a  rev- 
enue may  be  derived  in  ample  measure  to  meet  the 
requirements  of  that  part  of  the  pension  roll  for  which 
no  other  provision  is  made.  By  maintaining  the  duties 
upon  articles  of  luxury  and  voluntary  use,  covering 
mainly  silks,  laces,  edgings,  embroideries,  artificial  flowers, 
perfumery,  cosmetics,  etc.,  and  the  finer  textile  fabrics, 
chinaware,  earthenware,  which  depend  not  upon  utility  of 
necessity  for  their  use,  but  upon  the  fleeting  fashion  or 
fancy  of  each  year,  we  may  not  only  secure  an  ample 
revenue,  but  exercise  the  discretion  and  discrimination 
which  Sir  Robert  Peel  so  wisely  declared  to  be  necessary 
in  altering  a  system  which  has  been  so  long  in  existence. 


128  TAXATION  AND    WORK. 

Of  course  it  is  not  intended  to  propose  to  abate  the 
duties  upon  the  finer  kinds  of  manufactured  goods  without 
due  notice  or  by  any  single  act.  Such  a  poHcy  would  7iot 
be  giving  due  consideration  to  the  effect  of  a  long-con- 
tinued high  tariff.  When  a  right  method  of  reducing  the 
tariff  has  been  chosen,  it  is  not  important  that  the  whole 
work  should  be  accomplished  in  any  one  year,  although 
it  may  be  done  by  one  act  covering  a  provision  for  a  pro- 
gressive reduction. 

It  will  be  remembered  that  the  change  which  was 
brought  about  under  very  similar  conditions  in  Great 
Britain  was  entered  upon  in  1842  but  was  not  ended  until 

1853. 
A  very  large  part  of  the  machinery  which   is  now  in 

operation  in  this  country  upon  fabrics  that  may  be 
imported  has  been  heavily  increased  in  its  cost  relative 
to  that  of  the  competitors  in  manufacturing  in  other 
countries  by  the  same  system  of  duties.  Due  regard 
should  be  given  to  that  fact,  and  if  duties  upon  such 
fabrics  are  maintained  at  moderate  or  even  high  rates 
during  the  life  of  such  machinery,  which  ranges  from  ten 
to  fifteen  years,  no  injustice  would  be  done  and  no  harm 
would  come  of  any  moment  even  to  the  consumer  of  the 
manufactured  goods.  Long  before  that  period  had  elapsed 
it  is  probable  that  the  duties  on  all  of  the  finer  fabrics, 
except  those  which  are  hand-made,  would  have  become  as 
totally  inoperative  as  the  duties  now  are  on  a  large  part 
of  the  textile  fabrics  of  the  coarser  grades  which  we  our- 
selves make. 

In  other  words,  if  the  fear  of  revolutionary  measures 
and  extremely  radical  changes  can  be  removed,  there  is 
absolutely  no  obstacle  to  an  agreement  on  the  part  of 
moderate  men,  whatever  may  have  been  their  opinions  in 
respect  to  Protection  and  Free  Trade,  to  the  end  that  the 


PROGRESSIVE  REDUCTION  OF  DUTIES.  1 29 

objective  point  which  is  common  to  both  may  be  reached 
by  a  reasonable  compromise,  so  that  a  tariff  act  may  be 
passed  which  shall  possess  the  elements  of  stability  under 
which  this  strictly  business  question  may  be  removed  from 
the  political  arena. 

The  advocates  of  a  reform  of  the  tariff  make  a  grave 
error  in  demanding  an  instant  abatement  of  duties  and  a 
radical  revolution  in  our  whole  system  of  taxation  upon 
the  ground  that  because  there  is  a  duty  upon  a  given  article 
that  might  be  imported  it  follows  that  the  price  of  a 
domestic  product  of  like  kind  Mall  be  maintained  above 
what  it  would  otherwise  have  been  to  the  full  extent  of 
the  duty. 

This  delusion  has  been  mainly  promoted  by  the  falla- 
cious expectation  of  a  bounty  or  benefit  which  has  been 
held  out  to  farmers  by  the  advocates  of  the  McKinley 
tariff.  Aside  from  such  small  exchanges  of  farm  products 
as  may  be  made  with  the  Dominion  of  Canada,  the  pro- 
ducts of  the  farms  of  the  United  States  which  could  be 
imported  from  a  foreign  country  are  so  insignificant  as 
not  to  constitute  five  per  cent,  of  our  total  product  in- 
cluding sugar  and  wool. 

The  sole  effect  of  duties  upon  the  agricultural  products 
of  Canada  as  w^ell  as  upon  the  iron  ores  and  coal  of  the 
Maritime  Provinces  of  the  Dominion  of  Nova  Scotia  and 
New  Brunswick  is  to  deprive  the  inhabitants  of  Canada 
of  their  market,  and  thus  to  reduce  their  power  to  pur- 
chase our  manufactures,  of  which  they  are  as  large  con- 
sumers as  they  can  afford  to  be.  Being  thus  prevented 
from  working  their  own  mines,  forests,  and  fields  to  the 
best  advantage,  their  men  customarily  come  over  into  the 
United  States  in  the  working  season,  competing  without 
any  protective  duty  upon  them  with  our  own  working 
men,  and  thus  to  some  extent  depressing  the  rate  of  wages 


I30  TAX  A  TWA-    AND    JVORA'. 

here,  as  a  rule  returning  with  what  they  have  earned  to 
spend  their  wages  in  Canada  in  the  support  of  their  famihes. 
In  one  direction  the  Canadians  have  helped  to  save  some 
of  the  protected  manufactures  of  this  country  from  disas- 
ter ;  the  textile  factory  operatives  are  now  in  very  large 
proportion  French  Canadians,  as  the  workers  in  the  Penn- 
sylvania iron  and  coal  mines  are  Welsh,  English,  German, 
and  Bohemians,  or  Slavs,  commonly  called  Hungarians. 

If  regard  be  given  to  the  various  schedules  of  the  pres- 
ent tariff,  it  will  appear  that  more  than  one-half  the  speci- 
fications yield  so  little  revenue  as  not  to  pay  the  cost  of 
collection,  or  very  little  more,  while  another  very  large 
portion  of  the  specifications  are  inoperative  because  the 
advantages  of  this  country  in  production  at  high  rates  of 
wages  and  low  cost  have  substantially  enabled  us  to  pro- 
duce more  than  we  can  consume  even  of  these  dutiable 
articles. 

It  may  be  held  that  these  latter  conclusions  of  the 
writer  are  inconsistent  with  the  grounds  of  objection  upon 
which  the  McKinley  tariff  has  been  condemned. 

In  the  subsequent  chapters  of  this  series  these  pos- 
sible objections  and  the  true  method  of  discrimina- 
tion in  the  imposition  of  taxes  upon  imports  so  as 
to  promote  domestic  industry  and  protect  American  labor 
from  any  undue  burden  will  be  finally  dealt  with. 


CHAPTER  XX. 
Cost  of  a  High  Tariff. 

In  the  debate  upon  the  tax  on  tin-plates  and  on  other 
occasions  it  has  been  urged  by  distinguished  Senators 
that  even  if  the  effect  of  a  duty  were  to  raise  the  price  for 
a  time,  yet  when  distributed,  this  tax  would  come  to  so 
small  an  amount  on  each  tin  utensil  as  not  to  be  appre- 
ciable. In  other  words,  the  excess  of  price  that  has  been 
paid  during  the  last  few  years  on  tin-plates  used  in  all  the 
arts,  and  especially  in  canning,  amounting  to  over  sixty 
million  dollars  ($60,000,000)  is  not,  in  the  judgment  of 
these  gentlemen,  an  appreciable  burden  !  Such  an  argu- 
ment displays  the  profound  ignorance  of  him  who  presents 
it  in  regard  to  modern  commerce,  manufactures,  and 
agriculture. 

The  burden  of  a  tax  is  to  be  measured.  First,  by  the 
ratio  which  the  tax  bears  to  profits  that  might  be  made  in 
any  given  occupation,  were  there  no  tax  upon  the  mate- 
rials. Unless  there  is  profit  the  industry  will  not  be 
undertaken. 

Second,  the  burden  of  the  tax  must  be  measured  or 
estimated  by  its  ratio  to  the  wages  or  labor-cost  into 
which  the  tax  material  enters  as  a  component  material. 
The  burden  of  the  tax  may  apparently  be  very  slight  in 
ratio  to  the  gross  value  of  the  product,  and  yet  be  very 
heavy  in  ratio  to  the  labor-cost,  yet  heavier  in  ratio  to 
profits. 

131 


132  TAXATION  AND    WORK. 

Let  it  be  assumed,  for  instance,  that  the  cost  of  canned 
fish,  soups,  meat,  milk,  or  other  food  products  is  divided 
into  separate  items  in  somewhat  customary  proportions, 
such  as  govern  the  cost  of  other  articles.  The  cost  of 
packing  and  the  cost  of  the  package  or  can  used  in  pre- 
serving food  is  large  in  ratio  to  the  prime  cost  of  the 
material,  much  of  which  would  be  wasted  if  it  could  not 
be  so  preserved.  We  will,  however,  assume  that  the  cost 
of  the  food  material  which  is  to  be  canned  or  packed 
comes  to  one-half  or  50  per  cent,  of  the  value  of  the  final 
product.  Next,  that  the  labor  in  the  canning  factory  may 
be  estimated  at  twenty  per  cent.  We  will  assume  that 
the  untaxed  tin  for  the  can  would  cost  twelve  per  cent., 
and  that  the  tax  upon  tin  would  come  to  ten  per  cent. 
We  will  assume  that  a  net  profit  of  eight  per  cent,  on  the 
work  would  cause  the  business  to  be  established  and  as 
rapidly  extended  as  the  demand  would  warrant.  These 
estimated  proportions  may  be  defined  by  lines. 

Materials  ...  50  per  cent. _ _ 

Labor         .         .         .  20    "     "     - 

Untaxed  tin        .         .  12    "     "     ~ 

Tax  on  tin  .         .  10    "     "     

Profit         ...  8     "     "     


Whether  this  proportion  vi^ould  exactly  fit  the  canning 
industry  is  immaterial.  There  are  many  examples  of 
industry  in  which  such  would  be  the  proportions.  It  will 
be  remarked  that  while  the  tax  is  only  ten  per  cent,  upon 
the  product,  it  is  fifty  per  cent,  upon  the  labor,  and  one 
hundred  and  tzventyfive  per  cent,  upon  the  profit. 

Now  let  it  be  assumed  that  this  apparently  small  tax 
were  abated  ;  then  the  capitalist  or  employer  could  advance 
wages  one  half  without  changing  the  price  ;  or  he  could 


COST  OF  A    HIGH    TARIFF.  1 33 

advance  wages  twenty-five  per  cent,  and  increase  his  own 
profits  sixty-two  and  one  half  per  cent. ;  or,  by  making 
an  extra  discount  of  ten  per  cent,  on  his  wliolesale  price, 
he  could  get  a  very  much  wider  market,  employ  more 
workmen,  and  gain  a  greater  aggregate  profit  at  the  same 
rate  on  each  sale. 

Yet  more,  it  depends  very  often  on  a  margin  of  much 
less  than  ten  per  cent,  of  profit  whether  a  foreign  market 
shall  be  supplied  with  very  many  classes  of  goods  from 
this  country  or  from  other  countries.  In  the  matter  of  con- 
densed milk,  for  instance,  Switzerland,  with  free  sugar  and 
free  tin  plates,  has  relatively  an  enormous  foreign  export 
trade  where  we  have  had  a  very  small  one,  if  any.  The  evil 
effect  of  a  small  tax  of  this  kind  may  be  much  greater 
than  appears  on  the  face  of  it.  Let  it  be  assumed  that 
the  cost  of  the  production  of  the  farm  products  which  are 
to  be  canned  or  preserved  cannot  be  reduced  without 
great  injury  to  the  farmer  or  the  gardener  ;  it  must  remain 
at  fifty  per  cent,  in  ratio  to  the  final  or  manufactured 
product  in  the  cans.  It  may  also  be  assumed  that  the 
cost  of  labor  computed  at  twenty  per  cent,  is  as  low  as  it 
can  be  put  in  comparison  with  other  branches  of  industry. 
In  other  words,  the  cost  of  the  materials  and  of  the  labor 
cannot  be  reduced  below  seventy  per  cent,  of  the  valua- 
tion of  the  manufactured  or  canned  product  without 
great  injury  to  both  farmers  and  workmen. 

On  the  other  hand,  the  imposition  of  a  tax  of  ten  per 
cent,  on  the  tin-plate  or  some  other  material  of  foreign 
origin  creates  such  a  disparity  in  the  cost  of  the  finished 
product  as  compared  to  other  countries  as  to  forbid  ex- 
port. Under  these  conditions  let  it  be  assumed  that  the 
home  market  becomes  overstocked  :  there  comes  what  is 
called  over-production  of  canned  provisions.  No-  large 
export  trade  can  be  established  because  other  countries 


134  TAXATION  AND    WORK. 

supply  canned  goods  which  are  put  up  in  untaxed  tin. 
Even  let  it  be  assumed  that  the  foreign  cost  of  the 
materials  is  the  same  as  it  is  here,  or  fifty  per  cent.,  and  that 
the  labor  cost  is  the  same,  or  twenty  per  cent. ;  let  it  also 
be  assumed  that  the  cost  of  the  tin  untaxed  is  the 
same,  or  twelve  per  cent.,  and  that  the  margin  of  profit 
is  substantially  the  same,  or  eight  per  cent.,  in  other 
countries. 

Now,  let  it  be  assumed  that  the  producer  of  the  same 
article  in  this  country  does  away  with  all  profit  and  tries 
to  export  his  product  merely  to  get  rid  of  his  excess.  The 
account  stands  as  follows  : 

Materials 50 

Labor 20 

Untaxed  tin 12 

82 
Taxes  on  tin 10 

Total 92  without  profit. 

The  tax  covers  his  whole  possible  profit  and  even  more. 
There  is  an  excess  of  cost  as  compared  to  the  foreign 
competitor  even  without  any  profit,  which  forbids  ex- 
port because  the  whole  commerce  of  the  world  now 
turns  upon  a  mere  fraction. 

The  difference  of  a  cent  a  bushel  of  wheat  will  send  an 
order  away  from  DakotatoSouth  America  or  India.  Under 
such  conditions  when  the  tax  more  than  equals  the  mar- 
gin of  profit,  the  employer  of  labor  in  the  canning  or  any 
other  industry  must  either  force  the  price  of  farm  pro- 
ducts down,  or  he  must  cut  down  the  wages,  or  the  busi- 
ness must  be  reduced  and  adjusted  to  meet  what  the  home 
market  only  will  take  at  a  profit.  If  there  is  no  profit 
the  business  stops.     This  brings  into  conspicuous  notice 


COST  OF  A   HIGH   TARIFF.  1 35 

the  fact  that  the  burden  of  taxation  is  measured  by  its 
ratio  to  the  profit  that  might  be  made  on  untaxed  ma- 
terials but  which  is  often  cut  off  by  such  taxes  so  as  to 
prevent  the  estabhshment  of  that  art  within  the  Hmits  of 
this  country.  Such  a  tax  Hmits  our  export  of  the  sur- 
plus which  is  not  needed  by  the  people  of  this  country  but 
is  wanted  by  others,  even  in  respect  to  articles  of  food 
for  which  the  world  is  going  hungry  but  cannot  buy  be- 
cause it  cannot  pay  with  goods.  Russia  has  to-day  no 
gold  with  which  to  pay  for  food,  yet  the  people  of 
Russia  are  starving  for  want  of  the  food  that  we  might 
supply  if  we  could  buy  sheet  iron  free  of  tax  or  some 
of  the  other  products  of  Russia  that  we  want. 

When  these  considerations  are  applied  to  the  estimate 
that  I  have  put  upon  the  true  cost  to  the  people  of  this 
country  of  the  taxes  which  are  now  imposed  upon 
crude  or  partly  manufactured  materials  that  might  be  im- 
ported from  other  countries,  estimating  that  cost  at  a 
sum  of  money  equal  to  about  three  hundred  million  dol- 
lars, it  will  be  observed  that  in  this  mere  estimate  in 
money  I  have  only  begun  to  state  the  bad  effect  of  that 
burden  of  taxation. 

For  instance,  while  during  the  period  of  ten  years  that 
have  lately  elapsed,  the  price  of  crude  iron  or  pig-iron  has 
not  been  maintained  in  this  country  above  the  price  in 
Great  Britain  and  Germany  to  the  full  measure  of  the  duty  ; 
nevertheless,  by  a  comparison  of  the  prices  of  pig-iron, 
year  by  year,  for  a  period  of  ten  years,  it  has  been  con- 
clusively proved  that  the  consumers  of  iron  in  this  coun- 
try have  paid  on  an  average,  year  by  year,  $70,000,000  more 
for  their  supply  of  crude  iron  ($700,000,000  more  in  ten 
years)  than  for  the  same  quantity  that  has  been  supplied  to 
other  consumers  who  buy  iron  from  the  works  of  Great 
Britain,  Germany,  and  Belgium.      During  this  period  the 


136  TAXATIOAT  AND    IVOHJC. 

actual  price  of  iron  has  been  very  much  reduced,  but  in  each 
year  during  the  progress  of  this  great  reduction  the  cost 
of  iron  to  consumers  in  the  United  States  has  been 
$70,000,000  in  excess  of  the  cost  of  the  iron  suppHed  to 
other  nations.  The  disparity  in  the  price  of  iron  rails  and 
iron  in  the  bar  or  sheet  is  yet  more,  and  the  disparity  in  the 
price  of  steel  in  the  form  of  ingots,  rails,  sheets,  and  bars 
is  yet  more.  No  exact  computation  can  be  made,  but 
when  it  is  alleged  that  the  disparity  or  difference  in  the 
price  or  cost  of  iron  and  steel  to  this  country  has  been 
one  Jiundrcd  million  dollars  ($  1 00,000,000) /^r  jj'ivrr  for  ten 
years,  that  affirmation  cannot  be  disputed,  and  the  more 
the  figures  of  prices  are  studied  the  more  certain  it  be- 
comes that  the  difference  or  disadvantage  on  our  side  has 
been  greater.  No  one  has  yet  ventured  to  deny  or  to 
attempt  to  disprove  this  statement. 

Now  let  this  disparity — no  matter  whether  it  has  been 
a  profit  of  individuals,  or  merely  an  increase  of  cost  with- 
out profit  to  the  ironmasters — be  considered  in  its  ratio 
to  profits.  In  a  broad  and  general  way  one  may  estimate 
the  cost  of  the  material  that  enters  into  the  heavier  kinds 
of  machinery  at  sixty  per  cent.,  and  of  the  labor  at  twenty 
per  cent. 

Then  it  appears  that  the  disadvantage  or  higher  cost  of 
iron  to  the  makers  of  heavy  machinery,  in  the  construc- 
tion of  vessels  and  in  many  branches  of  work,  is  greater 
than  the  entire  cost  of  labor  in  Great  Britain,  in  the  con- 
version of  untaxed  iron  and  steel  into  these  same  finished 
forms.  In  this  view  of  the  matter  the  reason  becomes 
very  plain  why  we  cannot  compete  with  British  steamers 
upon  the  ocean.  The  imagination  fails  to  conceive  the 
effect  of  this  disadvantage  which  is  due  to  the  disparity 
in  the  cost  of  iron  and  steel  in  depriving  us  of  the  oppor- 
tunity to  supply  the  non-machine-using  nations  with  what 


COST  OF  A   HIGH   TARIFF.  1 3/ 

they  need  in  Kianufactured  goods,  and  in  depriving  us  of 
the  opportunity  to  meet  the  increasing  demands  of  Asia, 
Africa,  South  America,  and  Austrah'a,  for  machinery  in  aU 
forms,  for  rails,  engines,  and  cars,  and  in  depriving  us  of 
any  share  in  ocean  transportation.  I  have  stated  that  the 
exports  and  imports  of  all  nations  come  to  seventeen  bill- 
ion dollars  a  year;  our  proportion  of  that  international 
trafific  is  ten  per  cent.  The  magnitude  of  our  domestic 
traffic  has  lately  been  demonstrated  in  an  article  in  TJic 
Forum,  by  Edward  P.  North,  in  which  he  quotes  from  an 
address  given  at  the  Deep-Water  Ways  Convention,  held 
last  December  in  Detroit,  by  Mr.  George  H.  Ely.  This 
statement  is  that  "  about  thirty-six  million  registered  net 
tons  of  shipping  passed  the  city  of  Detroit  in  the  previous 
year  during  the  two  hundred  and  twenty-five  days  that 
the  navigation  of  the  great  lakes  was  open."  .  .  . 
"  The  aggregate  tonnage  entering  and  clearing  from  the 
ports  of  London  and  Liverpool  during  the  entire  year 
does  not  equal  that  passing  Detroit  in  seven  months,  and 
that  is  a  growing  commerce."  Why  should  not  our 
foreign  trafific  be  brought  up  to  that  of  England  ? 

Were  the  price  of  iron  and  steel  the  same  in  this  country 
and  Great  Britain,  as  they  would  be  were  it  not  for  the 
duty  imposed  by  us,  making  due  allowance  for  ocean 
transportation,  it  would  be  in  fact  immaterial  whether  the 
price  of  iron  were  $i6,  or  $20,  or  $25  a  ton  in  either  coun- 
try. We  use  nine  million  tons  of  iron.  Our  relative  dis- 
advantage on  the  average  for  many  years,  let  it  be  assumed, 
has  been  $7  per  ton.  If  there  had  been  no  duty,  the 
price  of  iron  in  this  country  might  have  been  higher  by 
one  half  that  difference,  or  $3.50;  nevertheless,  the  price 
of  iron  to  our  consumers  would  have  been  the  same  as  in 
Great  Britain,  and  we  should  have  shared  the  international 
commerce  of  the  globe  and  the  ocean  transportation  in  a 


138  TAXATION-  AND    WORK. 

measure  that  no  one  can  determine,  bringing  in  an  advan- 
tage in  comparison  with  which  the  sHghtly  higher  price 
of  iron  would  have  been  a  mere  trifle.  There  would  have 
been  none  of  the  great  fluctuations,  and  so-called  over- 
production such  as  now  affects  the  iron  industry.  There 
would  have  been  a  uniformity  and  practical  stability  in 
prices,  and  as  the  cost  of  coal  is  rapidly  rising  in  England 
and  the  supply  of  coal  and  iron  ore  is  becoming  relatively 
deficient,  so  the  more  urgent  demand  of  this  country  upon 
the  mines  and  works  of  England  by  advancing  prices 
there  would  cause  the  opening  of  our  mines  and  works  so 
much  the  more  rapidly.  Our  mines  and  works  would  be 
protected  by  putting  up  the  prices  of  crude  iron  to  British 
consumers,  while  developing  our  own  resources  even  in 
more  rapid  measure  than  we  now  do.  Then  the  true  Pro- 
tection to  our  own  domestic  iron  industry  will  be  attained, 
because  no  one  can  compete  with  us  on  equal  terms  ;  our 
wages  will  be  higher  and  our  cost  less,  because  our  ores 
and  coal  are  more  abundant,  more  easily  worked,  and  with 
a  less  number  of  days'  labor  to  the  ton  of  iron  than  any- 
where else.  Whatever  nation  dominates  in  coal  and  iron 
controls  the  commerce  of  the  world.  Even  at  the  disad- 
vantage to  which  we  have  been  subjected  by  the  relatively 
higher  price  of  iron  and  steel,  we  yet  excel  so  much  in  the 
application  of  labor,  that  we  export  locomotive  engines, 
looms,  and  agricultural  tools  and  implements.  We  have 
gained  in  foreign  commerce  in  some  directions,  but  we 
have  lost  heavily  in  others.  The  disparity  or  difference 
in  price  against  us  has  become  a  greater  disadvantage  the 
lower  the  actual  price  is  forced.  A  disparity  caused  by 
the  tariff  of  $9  was  a  comparatively  small  matter  when  the 
price  of  iron  ranged  from  $40  to  $50  a  ton,  as  it  did  a  few 
years  ago,  as  compared  to  the  difference  of  a  little  under 
$7  now,  when  the  price  of  iron  is  less  than  $20.    We  have 


COST  OF  A    HIGH   TARIFF.  1 39 

paid  this  excess  of  cost  of  iron,  $70,000,000  average  year 
by  year,  on  all  the  metal  that  has  been  consumed  in  this 
country,  sometimes,  it  is  admitted,  not  to  the  full  extent 
of  the  duty.  But  to  the  extent  to  which  that  duty  has 
kept  the  price  in  this  country  higher  than  it  would  other- 
wise have  been,  and  higher  than  it  has  been  in  foreign 
countries,  it  has  cost  us  ten-fold  any  possible  benefit  to 
the  producers  of  iron. 

Moreover,  the  obstruction  to  our  demand  upon  the  iron 
and  coal  deposits  of  Great  Britain,  Belgium,  and  Germany 
has  doubtless  tended  to  keep  the  price  of  iron  still  lower 
in  Europe  than  it  would  have  been  had  we  been  free  to 
purchase  our  materials  from  the  representatives  of  those 
works.  We  consume  nearly  forty  per  cent,  of  the  world's 
total  product  of  iron.  We  have  the  greatest  purchasing 
■power  of  any  nation,  and  to  the  extent  to  which  our  pur- 
chases of  iron  from  England  have  been  obstructed,  the 
purchasing  power  of  England  in  respect  to  our  grain  and 
food  has  been  diminished.  To  that  extent  the  iron-mas- 
ters of  England,  in  the  absence  of  our  demand,  have  sup- 
plied the  machinists  of  Europe  at  lower  cost  of  iron  to 
them.  That  is  to  say,  the  machine-makers  and  the  ship- 
builders of  Europe  have  been  protected  by  exemption 
from  taxation  on  materials,  while  ours  have  been  hindered 
in  their  industry,  and  our  power  to  construct  American 
ocean  steam-ships  has  been  destroyed. 

It  has  sometimes  been  held  that  when  in  consequence 
of  our  tax  upon  imports  the  price  has  been  reduced  in 
other  countries  on  the  articles  which  we  still  import, 
we  have  simply  put  the  tax  on  the  people  of  such  other 
countries.  There  could  not  be  a  more  mischiev^ous  error. 
To  the  extent  that  we  keep  down  prices  in  other  coun- 
tries by  tariff  obstructions,  we  diminish  the  power  of  pur- 
chase of  that  country  in  respect  to  our  food,  and  when 


I40  TAXATIO.W  AXD    WORK. 

our  tariff  tax  has  reduced  the  prices  of  iron  and  steel, 
wool,  tin-plates,  or  some  other  crude  materials  abroad  we 
have  given  the  advantage  to  the  foreign  consumer  of  these 
crude  materials  over  our  own  consumers.  In  this  way  we 
have  invited  the  increasing  quantity  of  imports  of  finished 
products  at  lessening  cost  by  the  very  acts  by  which  we 
have  attempted  to  exclude  them.  Any  tax  imposed  in 
this  country  on  crude  materials  protects  the  foreign  manu- 
facturer. 

I  will  not  attempt  to  measure  the  effect  of  the  disparity 
on  anything  but  iron  and  steel.  The  demand  of  the 
world  for  tools,  machinery,  and  other  implements  made 
of  iron  and  steel  is  constantly  increasing.  It  is  far  in  ad- 
vance of  the  increase  in  population.  If  the  price  of  these 
crude  materials  were  the  same  in  Europe  and  this  country 
(aside  from  the  freight  charge  to  and  from  there,  which  is 
trifling),  then  our  ship-builders,  machinists,  stove-makers, 
and  the  like  would  enter  into  the  world  of  commerce  on 
substantially  the  same  conditions  and  on  even  terms  with 
their  competitors  in  other  countries  whatever  the  actual 
price  of  iron  might  be.  They  are  forbidden  to-day  by 
the  relation  which  the  tariff  taxes  bear  to  the  profit  that 
would  induce  the  manufacture  of  goods  for  export.  It  has 
been  held  that  if  the  tax  is  ten  per  cent,  on  the  finished 
product — that  is  to  say,  if  the  tariff  tax  threatens  a  dis- 
parity between  this  country  and  another  of  ten  or  even 
five  per  cent.,  then  the  profit  that  under  free  conditions 
would  have  induced  the  undertaking  of  the  work  is  for- 
bidden by  the  tax. 

Taxes,  on  the  other  hand,  upon  the  finished  products, 
especially  upon  articles  which  depend  upon  luxury, 
fashion,  or  fancy  for  their  sale,  may  simply  cost  the  con- 
sumer who  chooses  to  buy  them  just  the  amount  of  the 
tax.     A  revenue  tax  upon  finished  products  may  there- 


COST  OF  A   HIGH    TARIFF.  I4I 

fore  be  substantially  consistent  with  the  rule  that  all 
taxes  that  the  people  pay,  the  government  shall  receive, 
while  a  tax  upon  the  crude  or  partly  manufactured  ma- 
terials is  not  consistent  with  this  rule.  The  cost  of  these 
imported  materials  which  enter  into  the  processes  of 
domestic  manufacture  prevents  diversity  of  manufactures, 
limits  production,  prevents  exports,  and  burdens  com- 
merce at  every  point.  The  burden  of  such  taxation  may 
be  tenfold  what  the  government  receives,  and  yet  it  may 
not  yield  even  a  private  profit  to  any  one ;  witness 
the  increase  in  the  cost  of  woollen  goods  accompanied  by 
a  reduction  in  the  price  of  protected  wool. 

Having  thus  analyzed  the  disparity  in  the  relative 
burden  of  tariff  taxation,  the  general  conclusions  which 
may  be  derived  from  this  series  of  treatises  will  be  given 
in  the  final  chapter.  The  subject  treated  in  this  chapter 
is  the  only  branch  of  the  tariff  question  that  requires 
hard  thinking  and  close  analysis  in  order  to  make  it  plain. 
Every  person  who  has  the  slightest  knowledge  of  com- 
merce is  aware  that  by  way  of  the  application  of  modern 
machinery  the  maximum  of  production  in  any  given  line 
is  very  quickly  attained,  and  this  makes  it  almost  sure 
that  the  representatives  of  some  important  product  may 
or  will  overstock  the  home  market  in  a  very  short  time. 

Again,  any  one  who  is  familiar  with  business  knows 
how  difficult  it  is  to  bring  the  production  down  again  to 
a  suitable  point  after  the  market  has  been  overstocked, 
and  how  depressingly  and  how  relatively  grave  is  the 
effect  upon  prices  of  a  very  slight  excess,  which  cannot  be 
consumed  and  which  cannot  be  exported.  Keeping  these 
facts  in  mind,  it  will  be  observed  that  in  respect  to  grain 
and  cotton,  we  are  subject  to  a  very  large  excess  of  pro- 
duct above  any  possible  consumption  within  the  limits  of 
this  country.     While  it  is  true  that  Europe  must  take  our 


142  TAXATION  AND    WORK. 

food  or  starve,  and  while  it  is  also  true  that  foreign 
spindles  must  be  supplied  with  American  cotton  at 
present ;  yet  to  what  extent,  at  what  price,  and  how 
tapidly  European  countries  can  take  from  us  these  prod- 
ucts, depends  not  only  upon  their  own  urgent  demand, 
but  also  on  their  control  of  the  means  of  payment.  So 
far  as  payment  may  be  made  in  goods  the  trade  may  be 
prompt  and  reciprocal,  but  when  we  obstruct  or  refuse  to 
take  the  goods  with  which  we  might  be  paid,  the  pur- 
chasers of  our  products  must  find  a  market  for  these 
good  in  other  countries  from  which  they  may  derive  the 
money  which  is  to  be  placed  to  our  credit  in  London  for 
payment. 

The  farmers  and  cotton  growers  of  this  country  have 
recently  been  trying  to  find  out  what  is  the  matter  with 
their  markets,  and  they  have  demanded  more  money. 
The  depression  in  the  price  of  farm  products  and  the 
difficulty  in  the  sales  of  the  excess  lie  at  the  bottom  of 
this  demand  for  more  money,  and  have  exposed  us  to  the 
dangerous  agitation  of  the  silver  question.  What  the 
farmers  require  is  a  more  open  and  a  wider  market  and  a 
readier  sale  of  the  excess  of  their  products,  which  they 
can  only  secure  by  removing  the  obstruction  to  the  import 
of  the  means  of  payment  with  which  the  world  is  waiting 
to  meet  them. 

Again,  our  manufactures  are  subject  to  great  fluctua- 
tions. Why  ?  Because  their  possible  home  market  is 
very  largely  among  the  farmers,  or  among  those  who 
supply  the  farmers  with  tools  and  implements,  or  who 
move  the  products  of  the  farm  from  the  field  to  the  con- 
sumer. More  than  one  half  of  the  domestic  demand  for 
the  manufactures  of  this  country  rests  upon  the  ability  of 
the  farmer  to  buy  the  goods  ;  the  ability  of  the  farmer  to 
buy  manufactured  goods  depends  upon  his  ability  to  sell 


COST  OF  A    HIGH    TARIFF.  I43 

his  excess  or  surplus  of  products  for  export  to  foreign 
countries.  Indirectly  the  stability  of  the  market  for  all 
products  depends  upon  the  free  export  of  our  surplus. 

The  revenue  derived  from  the  crude  materials  which  are 
necessary  in  the  processes  of  domestic  industry  has  formed 
but  a  small  part  of  the  excess  of  our  revenue,  which  has 
been  applied  to  the  purchase  of  our  bonds  long  before 
their  maturity.  It  could  all  be  spared  at  the  present  time 
without  the  loss  of  revenue  being  felt  in  the  slightest 
degree.  I  am  of  the  profound  conviction  that  the  indi- 
rect injury  to  manufactures,  agriculture,  and  commerce  is 
fifty-fold  as  great  by  measure  in  mere  money.  That  is  to 
say,  the  revenue  of  about  $14,000,000  which  the  govern- 
ment receives  from  taxes  upon  crude  materials  which  are 
necessary  in  all  processes  of  domestic  industry  may  have 
cost  us  $700,000,000. 

In  other  words,  I  think  that  no  one  can  deal  with  this 
tax  in  its  ratio  to  profits,  in  its  obstruction  to  exports,  or 
in  its  pernicious  effect  in  every  direction,  without  reaching 
the  conclusion  that  the  cost  of  the  revenue  secured  by 
the  government  upon  wool,  pig-iron,  coal,  ore,  and  a  few 
other  crude  articles  has  been  fifty-fold  the  amount  of  the 
revenue  that  the  government  has  secured.  This  cost 
consists  in  privation  of  commerce,  through  the  effect  of 
this  apparently  petty  tax,  and  in  the  disparity  in  the  cost 
of  domestic  manufactures  heretofore  demonstrated. 

The  total  revenue  derived  from  the  articles  classed  as 
crude  products  necessary  in  our  domestic  manufactures 
in  the  last  fiscal  year  was  $14,000,000,  chiefly  from 
wool  and  other  fibres,  coal,  and  iron.  The  direct  effect 
of  this  tax  in  maintaining  the  cost  of  the  material 
of  our  manufactures  above  that  of  other  countries  I  can- 
not put  at  less  than  the  entire  cost  of  the  conduct  of  this 
government,  including   pensions,    or    over    $300,000,000. 


144  TAXATION  AND    WORK. 

The  indirect  effect  of  this  and  other  taxes  upon  the 
imi)ort  of  the  products  of  other  countries,  which  are 
their  only  means  of  payment  for  our  products  of  agri- 
culture, cannot  be  computed.  It  deprives  us  of  what 
might  be  the  profits  upon  agriculture  and  commerce, 
which  may  come  to  three  or  four  hundred  million  dollars 
more.  Who  can  tell  ?  The  evil  can  never  be  measured 
until  it  is  removed. 

In  a  previous  number  the  statement  has  been  submitted 
of  the  depressing  effect  of  similar  taxes  upon  the  domes- 
tic industry  of  Great  Britain  in  1842.  Sir  Robert  Peel 
and  those  who  supported  him  in  the  abatement  of  these 
petty  taxes  upon  materials  had  little  comprehension  of 
the  prosperity  that  would  ensue  as  soon  as  they  were 
removed.  An  income  tax  was  twice  levied  for  limited 
terms  of  three  years  each,  to  make  up  for  the  expected 
deficiency  of  revenue  which  it  was  assumed  would  ensue 
from  the  removal  of  duties  upon  crude  materials.  But 
the  removal  of  this  tax  gave  such  an  immense  impetus  to 
British  agriculture,  commerce,  and  manufactures  alike, 
that  in  each  instance  the  income  tax  became  a  surplus. 
The  import  of  dutiable  goods  increased,  and  the  revenue 
thereon  increased  more  rapidly  than  the  abatement  had 
diminished  it.  The  income  tax  itself  also  yielded  a  far 
greater  sum  than  its  promoters  anticipated,  because  the 
incomes  subject  to  tax  were  so  rapidly  developed  by  the 
increasing  prosperity  of  the  country. 

We  shall  never  know  in  this  country  how  much  hurt 
has  come  to  us  from  these  malignant  taxes  on  crude 
materials  until  one  or  two  years  after  they  have  been 
removed. 


CHAPTER  XXI. 

Development  by  Free  Commerce. 

I  MAY  now  give  a  summary  of  the  propositions  that 
have  been  submitted  in  this  series  of  chapters  on  Taxation 
and  Work.  My  experience  covers  fifty  years  of  observa- 
tion, as  boy  and  man,  since  I  first  became  connected 
with  the  textile  manufactures  of  this  country.  During 
thirty  years  since  the  publication  of  my  first  pamphlet 
upon  Cheap  Cotton  by  Free  Labor,  in  1861,  I  have  given 
close  study  to  all  our  industrial  conditions. 

In  that  pamphlet  and  in  two  subsequent  treatises  upon 
the  cotton  fibre  in  1863,  I  made  a  forecast  of  the  future 
of  this  plant,  which  was  then  deemed  as  visionary  as  my 
forecast  of  the  future  fiscal  policy  of  this  country  may 
now  be  regarded.  I  presented  all  the  facts  on  which  the 
conversion  of  the  seed  into  oil,  oil-cake  fertilizers,  and 
paper  stock  would  be  accomplished,  showed  the  value  of 
the  stalk  whenever  success  is  attained  in  separating  the 
fibre,  and  the  possible  value  of  the  root  for  tanning  or 
dyeing. 

I  have  been  lately  informed  that  the  roots  are  now  sold, 
and  it  is  not  improbable  that  my  subsequent  prediction 
will  be  fulfilled,  that  the  fibre  of  the  cotton  plant  will 
become  a  secondary  product  not  equal  in  value  to  the 
other  portions  of  the  plant. 

I  am  now  profoundly  convinced  that  the  system  techni- 
cally known  as  Protection  has  reached  its  logical  conclu- 
10 

145 


146  TAXATION  AND    WORK. 

sion  and  destruction  in  the  McKinley  act,  and  that 
through  a  reconstruction  of  parties  for  the  true  consider- 
ation of  financial  questions,  a  system  of  national  taxation 
will  presently  be  adopted  which  will  give  just  and  equal 
protection  to  every  branch  of  industry  by  exempting 
every  crude  or  partly  manufactured  article  from  national 
taxation,  and  by  reducing  duties  upon  all  other  articles 
to  a  revenue  basis,  due  regard  being  given  to  existing 
conditions  in  framing  measures  which  will  bring  about  this 
result  within  a  short  term  of  years. 

If  a  beginning  should  now  be  made  by  the  exemption 
of  materials  used  in  domestic  industry  from  all  taxation, 
with  an  adjustment  of  duties,  even  at  somewhat  higher 
rates,  on  finished  products  w^hich  are  ready  for  consump- 
tion, there  would  presently  be  little  opposition  to  abating 
such  duties  by  ten  per  cent,  each  year  until  they  should 
be  either  wholly  removed  or  reduced  to  a  moderate  and 
permanent  revenue  basis. 

My  reasons  for  these  conclusions  are  as  follows  :  I  hold 
it  to  be  impossible  for  any  person  to  come  to  any  other 
conclusion  who  investigates  the  problem  or  the  method 
by  which  I  was  myself  convinced  that  the  system  of 
Protection  in  which  I  had  been  brought  up  was  wrong. 
That  method  is  to  review  the  sequence  of  events  since 
Hamilton  framed  a  low-revenue  tariff  and  advocated  it 
upon  the  ground  that  it  would  give  incidental  protection 
to  certain  specific  branches  of  industry  which  he  then 
thought  it  might  be  desirable  to  promote  more  rapidly  in 
this  way,  because  the  processes  were  either  guarded  in 
other  countries  by  penal  enactments  for  their  protection, 
or  were  supported  by  bounties  for  the  distinct  purpose  of 
keeping  special  control  over  them. 

I  think  that  any  impartial  observer  or  student  who  will 
take   Hamilton's   list   of  manufactures,   which   were  well 


DEVELOPMENT  BY  FREE    COMMERCE.  1 47 

established  a  century  since,  and  keeping  that  list  in  mind, 
will  pass  in  review  the  present  conditions  of  all  our  varied 
and  diversified  occupations,  will  reach  certain  conclusions, 
which  are  as  follows  : 

1st.  All  arts  of  any  considerable  importance  in  whose 
behalf  tariff  Protection  is  now  invoked,  were  well  estab- 
lished before  the  enactment  of  the  first  tariff  of  1789, 
with  the  exception  of  the  cotton  manufacture  which  has 
been  developed  subsequently,  notably  by  the  invention 
of  the  American  cotton  gin.  To  this  single  important 
branch  may  be  added  some  minor  arts  also  due  to  sub- 
sequent inventions  of  which  perhaps  more  have  originated 
in  this  country  than  elsewhere. 

2d.  The  specific  branches  of  industry  in  whose  behalf 
the  support  of  a  tariff  has  been  invoked,  have  been  few 
in  number  even  among  the  specific  manufactures  of  the 
country.  They  consist  mainly  of  the  primary  processes 
in  the  production  of  iron  and  steel,  of  textile  manufac- 
tures, glass,  and  pottery,  and  some  of  the  cruder  products 
in  what  are  known  as  chemicals. 

3d.  These  protected  industries  constitute  a  very  small 
part  even  of  what  are  classed  as  manufactures,  and  except 
when  protected,  not  only  by  duties  upon  imports,  but  by 
patents  like  the  Bessemer,  or  by  the  control  of  ore  and 
coal  mines  in  connection  with  the  railways  leading  to 
them,  they  have  produced  neither  higher  wages  nor 
greater  profits  than  the  more  numerous  and  important 
branches  of  manufactures  and  metal  working,  to  which 
no  tariff  protection  could  ever  have  been  given,  because 
no  product  of  like  kind  could  be  imported. 

4th.  The  specially  protected  branches  of  industry  have 
been  subject  to  greater  fluctuation  than  any  others, — have 
become  bankrupt  more  frequently, — are  more  uncertain  in 
giving  continuous  employment   than  any  others, — while 


1 48  TAXATION  AND    WORK. 

the  labor  is  less  American  and  more  foreign,  in  many 
instances  more  systematically  imported  than  is  the  case  in 
any  other  kinds  of  work. 

5th.  It  has  been  conclusively  proved  by  the  experience 
of  the  Southern  States  that  no  special  protection  is  re- 
quired even  in  the  beginning  of  the  work  of  mining  iron 
ore  or  its  conversion  in  the  furnace  or  the  iron  works,  or 
in  th«  establishment  of  textile  factories.  It  is  also  proved 
by  our  Southern  experience  that  as  soon  as  the  interfer- 
ence of  laws  controlling  the  condition  of  laborers  and  the 
direction  of  their  work  had  been  done  away  with  by  the 
abolition  of  slavery,  a  very  wide  diversity  of  occupations 
established  itself,  which  is  rapidly  bringing  about  the 
same  general  divisions  in  the  occupations  of  the  people 
that  has  also  accompanied  the  settlement  of  every  new 
territory  and  State  in  the  West. 

6th.  Nothing  more  need  be  said  about  the  supremacy 
of  this  country  in  the  production  of  at  least  ninety-five 
per  cent,  of  the  products  of  agriculture  that  we  require, 
and  which  we  produce  at  the  highest  rates  of  wages  and 
the  lowest  cost. 

7th.  Our  supremacy  in  the  matter  of  a  supply  of  timber, 
except  by  comparison  with  Canada,  is  admitted. 

8th.  No  other  iron-producing  country  can  approach 
us  in  the  facility  with  which  the  materials  for  the  pro- 
duction of  iron  may  be  assembled  at  the  furnace,  nor 
in  the  quantities  of  ore  and  fuel  lying  upon  or  near 
the  surface  of  the  ground  and  in  close  proximity  to  each 
other,  to  the  end  that,  by  the  measure  of  day's  work, 
no  other  country  can  compete  with  us  in  the  production 
of   iron. 

9th.  The  processes  known  as  the  manufacturing  and 
mechanic  arts  consist  in  the  final  conversion  of  the  crude 
materials,  which  are  derived  from  the  field,  the  forest,  and 


DEVELOPMENT  BY  FREE    COMMERCE.  149 

the  mine,  into  food,  shelter,  and  clothing,  all  intermedi- 
ate processes  being  means  to  these  ends. 

lOth.  The  necessary  supply  of  food  is  attained  even  in 
this  country  by  the  great  body  of  the  people,  perhaps 
ninety  per  cent,  of  the  whole  number,  at  the  cost  of  forty 
to  fifty  per  cent,  of  the  proceeds  of  their  work.  In 
Europe  a  much  greater  proportion  of  income  is  devoted 
to  securing  a  supply  of  food,  which  on  the  continent  is 
deficient  in  nutritive  power.  The  most  important  primary 
elements  in  the  production  of  food  are  phosphoric  acid  or 
phosphate  of  lime,  and  nitrogen.  In  respect  to  the  first 
element,  without  which  our  grain  and  cotton  crops  might 
ere  long  be  lessened,  the  recent  discoveries  of  phosphates 
in  Florida,  added  to  those  of  South  Carolina,  give  posi- 
tive assurance  of  an  adequate  supply  for  centuries  to 
come,  by  far  exceeding  any  other  known  supplies.  In 
respect  to  nitrogen,  we  possess  in  the  cow  pea  vine  the 
renovator  of  the  whole  area  of  southern  land  that  has 
been  scathed  by  the  slave  system  of  labor:  its  benefits,  as 
yet  almost  unknown,  may  yet  be  extended  over  the  North 
and  West.  In  the  alfalfa,  in  clover,  and  many  other  reno- 
vating plants,  we  also  possess  advantages  over  almost 
every  other  section  of  the  earth's  surface  yet  occupied. 
What  may  yet  be  developed  in  South  America  waits  for 
the  establishment  of  safe  government  and  sound  finance. 

Being  thus  assured  of  a  supply  of  food  material  in  such 
excess  that  we  are  now  "  smothered  in  our  own  grease," 
it  may  be  remarked  that  there  is  not  a  process  in  the 
mechanism  of  conversion,  or  in  making  the  appliances 
of  the  household,  which  is  not  of  necessity  conducted  in 
this  country,  or  of  which  a  similar  product  could  in  any 
considerable  measure  be  imported  from  a  foreign  country. 
On  the  contrary,  nearly  every  piece  of  machinery,  and 
almost  every  household  appliance  for  the  conversion  of 


150  TAXATION  AND    WORK'. 

food  is  relatively  to  other  countries  increased  in  its  cost 
by  the  imposition  of  taxes  upon  the  component  materials. 

No  article  of  any  considerable  importance  is  imported 
for  the  construction  and  equipment  of  the  grist  and  flour 
mill,  for  the  making  of  agricultural  implements,  for  the 
meat-packing  establishment,  for  the  sugar  refinery,  for  the 
brewery,  for  the  bakery,  for  the  furnishing  of  the  domestic 
kitchen  with  cooking  utensils,  for  the  creamery  or  the 
cheese  factory,  for  the  incubator,  or  for  the  domestic  hen- 
yard.  The  product  of  the  latter  in  annual  value  is  equal  to 
the  output  of  all  our  iron  furnaces,  double  the  value  of  the 
wool  clip,  and  more  than  double  the  true  value  of  the 
silver  product.  In  short,  in  this  food  department,  which 
is  the  most  costly  element  in  the  price  of  life,  we  supply 
ourselves  with  at  least  double  the  product  at  half  the  cost 
as  compared  to  every  European  country,  from  which  prod- 
uct those  who  do  the  work  derive  the  highest  wages  because 
the  process  of  production  is  conducted  at  the  lowest  cost. 

More  than  forty  per  cent,  of  the  people  of  this  country  are 
occupied  in  agriculture,  and  if  to  this  force  be  added  all 
the  men  and  women  who  arc  occupied  in  providing  the 
mechanism  of  the  farmer  and  the  appliances  by  which  food 
material  is  prepared  for  consumption,  more  than  one  half 
the  industry  of  this  country  is  employed  in  providing  the 
food  of  which  the  cost  is  about  one  half  the  price  of  life. 
It  is  deficiency  in  the  supply  of  food  and  the  consumption 
of  armies  that  is  the  cause  of  the  so-called  pauper  labor  of 
Europe  and  the  consequent  high  cost  of  production. 

The  only  way  in  which  Protection  can  be  given  to  this 
paramount  branch  of  industry  is  by  the  exemption  from 
taxation  of  the  materials  of  which  its  mechanism,  tools, 
and  appliances  are  made. 

While  agriculture  cannot  be  protected  by  duties  upon 
imports,  its  progress  and  prosperity  may  be  greatly  marred 


DEVELOPMENT  BY  FREE    COMMERCE.  151 

by  the  obstruction  to  exports  which  of  necessity  follows 
the  obstruction  of  duties  upon  the  import  of  the  goods 
with  which  our  exports  are  paid  for. 

nth.  The  shelter  of  the  people  of  this  country  comes 
next  in  its  relative  importance  ;  with  it  may  be  treated  the 
mechanism  of  distribution  by  rail,  river,  lake,  and  canal, 
by  means  of  which  food,  fibres,  timber,  metal,  and  fabrics 
are  placed  where  they  are  needed. 

It  is  impossible  to  give  a  complete  measure  of  the 
manufacture  of  houses  either  in  terms  of  money  or  terms 
of  work. 

It  may,  however,  be  readily  proved  that  the  manufac- 
ture of  buildings  or  the  means  of  shelter  for  people, 
processes  and  goods,  gives  employment  to  a  larger  num- 
ber of  workmen  than  are  employed  in  all  branches  of 
domestic  industry,  of  which  any  appreciable  part  could  be 
imported  from  a  foreign  country.  This  proof  may  be 
given  by  an  approximate  estimate  of  the  cost  of  providing 
house-room  for  the  annual  increase  in  our  population.  If 
we  compute  this  increase  at  2\  per  cent.,  the  increment  in 
1893  will  number  1,600,000.  If  we  assign  an  average  of 
one  house  or  its  equivalent  to  each  family  of  five  persons 
at  a  cost  of,  say,  $600  for  each  house  or  apartment,  then 
the  measure  in  money  of  the  manufacture  of  houses  for 
the  increase  of  population  only  will  come  to  $192,000,000 
in  1893.  The  elements  of  a  house  are  timber,  stone, 
brick,  glass,  and  metal,  all  of  which  are  of  necessity  of  do- 
mestic production  in  the  class  of  houses  with  which  we  are 
dealing.  The  average  earnings  of  the  men  who  are  occu- 
pied in  the  production  of  these  elements  of  shelter  do  not 
exceed  $500  per  year.  Deduct  ten  percent,  for  the  higher 
services  of  contractors  and  bosses,  and  we  have  in  round 
numbers  340,000  men,  occupied  in  all  the  arts  that  are 
required  to  manufacture  houses,  even  for  the  increase  of 


152  TAXATION  AND    WORK, 

population  at  only  $600  per  family  of  five.  This  is  an  art 
that  cannot  be  protected  by  a  duty  upon  the  import  of 
dwelling  houses,  but  which  is  taxed  at  every  point  by 
duties  upon  the  timber,  metal,  and  glass  which  constitute 
the  component  materials  of  chief  value. 

Each  one  must  compute  for  himself  the  extent  of  the 
building  trades  by  this  computation  of  the  least  important 
branch  considered  in  relation  to  quantity  of  material  and 
labor  consumed.  Shelter  in  all  its  phases  for  men, 
processes,  and  goods  cannot  give  occupation  to  less  than 
2,000,000  to  2,500,000  persons,  or  about  ten  per  cent,  of  all 
who  are  occupied  for  gain,  none  of  whom  can  be  protected 
by  discrimination  in  framing  revenue  measures  except  by 
the  exemption  of  the  materials  which  they  use  from  all 
taxes. 

The  relative  importance  of  the  mechanism  of  distribu- 
tion comes  next.  We  operate  170,000  miles  of  railway  at 
substantially  five  men  to  a  mile  or  more,  making  850,000. 
We  have  constructed  an  average  of  8,000  miles  of  railway 
per  year  since  1880.  As  nearly  as  it  can  be  estimated,  it 
takes  about  sixty  men  to  build  and  equip  a  mile  of  railway 
in  all  branches  of  the  work.  This  makes  480,000  to  be 
added  to  the  operating  force,  making  1,320,000  men  in 
this  one  branch  of  the  service. 

It  has  been  already  remarked  that  the  trafific  of  the 
Sault  St.  Marie  Canal  now  exceeds  the  trafific  of  the  Suez 
Canal,  from  which  every  one  may  get  some  idea  of  the 
mechanism  of  our  waterways.  Add  to  these  the  con- 
structors of  wagons  and  carriages,  and  it  would  seem  at 
least  probable  that  under  the  head  of  the  mechanism  of 
distribution  we  are  in  fact  dealing  with  a  body  of  men 
numbering  at  least  three  million,  who  can  only  be  pro- 
tected by  discrimination  in  framing  revenue  measures,  by 
exempting  all  the  materials  which  they  use  from  taxation. 


DE  VEL  OP  MEN  T  BY  FREE    COMMER  CE.  1 5  3 

I2th.  The  third  of  the  most  important  elements  in  the 
cost  of  living  is  Clothing.  It  is  almost  useless  to  attempt 
to  compute  numbers  or  the  measure  of  value  of  this 
branch  of  occupation,  because  it  is  so  much  divided  and 
so  large  a  part  is  done  in  the  household.  The  complete 
census  data  are  not  yet  at  our  disposal.  No  reasonable 
conception  can  be  reached  as  to  what  part  of  the  fabrics 
or  the  clothing  of  the  people  could  or  would  be  imported 
until  the  component  materials  of  the  fabric  and  the 
machinery  of  the  factory  are  exempt  from  taxation.  At 
$25  per  head,  the  consumption  of  textile  fabrics  by  65,- 
000,000  people  would  come  to  $1,625,000,000:  which 
estimate  may  be  warranted  by  extending  the  valuation  of 
domestic  textiles  and  imports  so  as  to  correspond  to  the 
average  cost  of  conversion  into  clothing.  This  branch  of 
industry  is  more  afTected  by  fashion  and  fancy  than  any 
other,  and  the  consumption  of  clothing  is  more  governed 
by  these  factors  than  the  provision  either  for  food  or 
shelter. 

Sufifice  it,  that  whatever  may  be  the  present  necessity 
or  expediency  of  continuing  to  raise  a  large  revenue  from 
duties  on  the  finer  textile  fabrics,  silks,  embroideries,  fine 
linens,  laces,  furs,  ribbons,  etc.,  etc.,  of  which  the  greater 
portion  of  the  imports  consists,  the  true  Protection  of  the 
manufacture  of  the  more  useful  and  staple  goods  of  wool 
and  cotton  must  consist  in  the  exemption  of  their  ma- 
terials from  taxation. 

13th.  It  may  be  held  that  by  giving  consideration  to 
the  method  of  promoting  domestic  industry  and  protect- 
ing American  labor  by  exemption  from  taxation,  either 
on  materials  or  on  the  processes  of  the  work,  a  simple  and 
effective  system  may  be  adopted,  under  which  all  the 
taxes  that  the  people  pay  will  be  received  by  the  Govern- 
ment.     When  that    is  accomplished,   the  correlative  of 


154  TAXATION  AND    WORK. 

national  taxation,  reduced  to  terms  of  work,  will  be  that 
of  four  to  five  per  cent,  of  the  labor  of  the  people.  It  has 
been  computed  in  a  previous  treatise  at  that  rate  doubled 
in  consequence  of  the  bad  methods  in  which  the  national 
taxes  are  now  levied. 

14th.  It  may  be  remarked  that  the  views  presented  are 
inconsistent.  It  has  been  stated  that,  in  the  judgment  of 
the  writer,  the  protective  system  has  not  in  the  long  run 
raised  wages  or  increased  profits,  but  rather  the  reverse. 
How  then,  it  may  be  asked,  can  the  cost  of  taxation  for 
the  support  of  Government  and  Pensions,  estimated  at 
$320,000,000  be  doubled  ?  If  this  sum,  which  as  received 
and  expended,  represents  the  work  of  over  500,000 
men  for  one  year  at  $2  a  day,  or  of  a  larger  number 
at  a  lesser  rate,  and  if  the  cost  has  been  doubled  by 
the  mis-direction  of  taxation,  what  has  become  of  the 
proceeds  of  the  work  of  the  second  body  of  500,000 
or  more  men,  the  proceeds  of  whose  work  the 
Government  has  not  received?  If  it  has  neither  gone 
into  profits  or  wages,  what  has  become  of  it  ? 

My  reply  is  NotJiing.     It  has  all  been  ivasted. 

The  attempt  to  attain  Free  Trade  by  developing  a  few 
special  branches  of  industry  by  means  of  duties  on  corre- 
sponding imports  at  the  cost  of  all  other  branches  has 
failed  ;  the  longer  it  has  been  pursued  the  less  has  it  ac- 
complished its  purpose. 

It  has  only  subjected  a  few  arts  to  an  artificial  stimulus, 
making  more  work  necessary  to  attain  the  same  product, 
that  might  have  been  attained  by  exchange  in  greater 
abundance. 

It  has  nowhere  been  held  that  the  Protection  of  a  high 
tariff  does  not  make  more  work,  but  the  object  of  science 
and  invention  is  to  save  work  and  not  to  make  it. 

The  direct  objections  to  this  system  are  threefold: 


DE  VELOPMENT  B  V  FREE   COMMERCE.  1 5  5 

1st.  It  makes  more  work,  but  it  diminishes  the  general 
product,  from  the  sale  or  exchange  of  which  all  profits  and 
wages  are  alike  derived. 

2d.  It  accustoms  a  great  many  people  to  depend  upon 
the  artificial  support  of  the  government  instead  of  their 
own  faculties,  thus  tending  to  disorder  and  corruption  in 
legislation  and  in  the  civil  service. 

3d.  It  establishes  a  disparity  in  the  cost  of  the  crude 
materials  which  enter  into  all  the  processes  of  our  indus- 
try as  compared  to  other  manufacturing  countries  with 
which  we  compete,  so  that  whatever  may  be  the  range  of 
prices  in  any  year,  until  the  tariff  becomes  inoperative 
they  are  higher  in  this  country  ;  therefore  foreign  manu- 
facturers are  protected  to  the  injury  of  our  own. 

In  conclusion,  however,  the  final  and  paramount  objec- 
tion to  the  obstruction  to  the  import  of  the  means  of 
payment  with  which  foreign  nations  liquidate  their  pur- 
chase of  the  excess  of  our  products  of  agriculture,  is  that 
its  evil  effect  upon  the  price  of  all  our  crops  is  something 
that  cannot  be  computed,  and  which  will  only  be  capable 
of  estimation  when  these  obstructions  are  removed. 


In  this  series  of  short  treatises  I  have  endeavored  to 
give  the  conclusions  derived  from  a  study  of  our  condi- 
tions, in  the  hope  that  they  may  be  conducive  to  a  just 
settlement  of  problems  which  are  vital  to  our  future  pros- 
perity. I  have  given  what  appear  to  be  the  facts,  and  I 
trust  that  in  the  future,  as  in  the  past,  my  computations 
will  be  accepted  by  the  representatives  of  both  sides  in 
this  question  whatever  value  may  be  attributed  to  my 
own  opinions. 

I  regard  it  of  great  importance  to  the  intelligent  dis- 
cussion of  this  question  that  even  those  who  are  opposed 
to  a  high  tariff  on  general  principles  should   not  be  per- 


156  TAXATION  AND    WORK. 

suaded  into  making  exceptions,  and  into  continuing  the 
present  system  in  part,  with  the  idea  that  it  may  be  profit- 
able and  suitable  for  a  time  to  do  so.  For  instance,  it  is 
assumed  by  some  of  the  representatives  of  some  of  the 
Southern  States,  in  which  iron  ore  and  coal  exist  in  great 
abundance,  that  the  continuance  for  a  time  of  the  duties 
on  ore  and  coal  may  enable  them  to  establish  the  produc- 
tion of  iron  more  surely.  That  is,  in  my  judgment,  an 
error.  Under  such  an  inducement,  iron  works  will  be 
established  by  those  who  are  not  masters  of  the  business, 
and  the  domestic  competition  which  will  ensue  will  be 
more  fatal  to  stability  and  success  than  any  foreign  com- 
petition could  possibly  be. 

I  have  said  that  the  benefit,  if  any,  that  has  been  gained 
by  the  iron  and  steel  producers  during  the  last  twenty 
years  in  excess  of  the  ordinary  gains  in  other  business,  has 
been  due  to  the  control  of  the  patents  and  to  the  control 
of  the  deposits  of  ore  and  coal  in  combination  with  im- 
portant railway  systems,  and  not  to  the  duties  on  imports. 

Again,  I  believe  it  to  be  a  very  grave  error  to  impute 
any  excess  in  wealth  or  welfare  in  the  Eastern  States  as 
compared  to  the  Western  and  Southern  to  the  protection 
of  a  high  tariff.  It  would  be  impossible  to  give  the  statis- 
tical data  that  might  be  cited  in  support  of  my  own 
views.  Sufifice  it  that  I  have  followed  the  economic  his- 
tory of  the  textile  manufactures  of  the  New  England 
States  for  a  very  long  period.  I  am  very  well  assured  in 
my  own  mind  that  New  England  would  be  richer,  its  peo- 
ple more  prosperous,  its  textile  manufactories  developed 
on  a  sounder  foundation,  if  there  had  never  been  any 
artificial  stimulus  given  to  them  beyond  a  system  of  duties 
computed  for  revenue  only,  on  the  general  direction  of 
Hamilton's  tariff.  Even  the  manufacturing  and  mechani- 
cal industries  of  New  England,  which  ever  could  be  or 


DEVELOPMENT  BY  FREE   COMMERCE,  I  57 

ever  have  been  subjected  to  foreign  competition,  except 
for  the  tariff  taxes  upon  the  crude  materials  which  are 
necessary  to  them,  are  but  few  in  number,  and  they  con- 
stitute a  very  small  portion  of  the  specific  branches  of 
manufacturing  and  mechanical  industry  on  which  New 
England  depends  for  the  purchase  of  her  food  and  other 
supplies  from  other  parts  of  the  country.  The  factory 
operative  who  has  put  his  or  her  savings  into  one  or  more 
of  the  well  managed  savings-banks  of  New  England  since 
the  enactment  of  the  Morrill  tariff  of  1861,  will  have 
earned  on  the  capital  thus  saved  a  larger  increment  of 
profit  than  has  been  attained  by  the  average  stockholder 
in  the  same  factories  in  which  such  operatives  have  been 
employed.     This  is  a  matter  capable  of  demonstration. 

Finally,  I  am  almost  inclined  to  take  the  position  seri- 
ously which  I  made  the  subject  of  an  address  before  the 
United  Boards  of  Trade  of  New  Hampshire,  not  many 
months  since  ;  to  wit,  that  the  accumulated  wealth  of  any 
community,  and  the  welfare  of  its  working  people,  as  in- 
dicated by  rates  of  wages  and  general  conditions  of  wel- 
fare, will  be  assured  in  inverse  proportion  to  the  natural 
resources  of  the  section  in  which  such  people  dwell,  and 
that  their  work  will  also  be  developed  in  greater  measure, 
and  greater  prosperity  will  ensue,  the  less  government 
interference  is  exerted  to  promote  the  investment  of 
capital,  or  to  influence  the  direction  of  the  work,  by  tariff 
legislation. 

In  other  words,  the  less  the  gratuities  of  nature  and  the 
less  the  bounties  secured  by  legislation,  the  more  sterile 
the  soil  and  the  more  necessary  the  work,  the  more  will 
gumption,  aptitude,  intelligence,  and  thrift  be  developed 
in  every  part  of  the  temperate  zone,  and  the  richer  and 
move  prosperous  will  the  people  become  who  dwell  under 
these  apparently  adverse  conditions. 


158  TAXATIO^r  AND    WORK. 

The  stimulus  of  a  moderately  cold  climate  in  which  it 
is  more  comfortable  to  work  in  a  factory  than  out-of- 
doors,  gives  a  great  advantage  over  the  warmer  or  hot 
section  of  any  country  in  the  textile  and  many  other 
arts. 


CHAPTER  XXII. 
High  Wages  and  Low  Cost. 

It  has  been  suggested  to  me  that  while  basing  my 
arguments  upon  the  theory  that  in  all  arts  to  which 
modern  science  and  invention  have  been  or  may  be 
applied,  the  highest  rates  of  wages  are  derived  where  the 
natural  conditions  of  production  are  most  favorable,  and 
where,  on  that  account,  any  given  product  is  made  at  the 
least  cost,  I  have  not  yet  proved  that  the  theory  is  sus- 
tained by  the  facts. 

It  is  held  that  this  proposition  is  an  apparent  paradox, 
and  that  I  have  treated  it  as  an  elementary  truth,  which 
will  not,  however,  be  readily  accepted  without  further 
demonstration.  I  have  therefore  devoted  to  this  subject 
an  article  supplementary  to  those  which  I  had  intended 
to  form  this  series. 

This  proposition  is  not  an  a  priori  theory  or  hypothesis, 
it  is,  in  mathematical  terms,  a  theorem ;  in  economic 
speech,  it  is  a  statement  of  a  principle  ;  in  practice,  it  is  a 
rule  governing  the  actions  of  men  when  not  interfered 
with  by  statute  law.  It  is  the  only  proposition  on  which 
the  application  of  machinery  to  production  can  be  jus- 
tified. If  science,  when  applied  to  production,  takes  away 
the  work  by  which  men  and  women  have  previously 
gained  the  means  of  living,  without  providing  other  and 
better  types  or  kinds  of  occupation  ;  if  mechanism  does 
not  assure  a  larger  product  and  better  wages, — then  the 

159 


l60  TAXATION  A  A^D    IVOR  A". 

machine-breakers  would  be  justified.  In  that  case  the 
only  rule  of  progress  would  be  the  continuance  of  hand- 
work, without  the  mechanical  appliances  by  means  of 
which  a  few  skilled  working  people  or  operatives  do  that 
which  formerly  required  the  continuous  and  arduous  work 
of  great  numbers.  It  may  be  held  that  higher  wages,  both 
in  money  and  in  what  money  will  buy,  follow  as  a  conse- 
quence from  the  lower  cost  of  production,  which  is  brought 
about  by  the  application  of  invention  and  skill  to  the  use- 
ful arts ;  or,  in  other  words,  that  high  wages  are  not 
merely  the  complement  or  correlative  of  the  low  cost  of 
production,  but  are  a  consequence  or  necessary  result  of 
such  low  cost. 

A  great  deal  of  the  mis-legislation  which  has  done  so 
much  injury  in  the  world  would  have  been  saved,  had  the 
true  source  of  wages  been  developed  at  an  earlier  date. 
The  conception  of  a  wage  fund,  or  sum  of  capital  accumu- 
lated as  an  antecedent  from  which  wages  might  be  paid 
in  the  process  of  production,  led  of  necessity  to  the  con- 
clusion that  the  rate  of  wages  would  be  determined  by  the 
number  of  persons  among  whom  such  given  and  neces- 
sarily limited  amount  of  capital  should  be  distributed. 
Hence  the  apparent  antagonism  between  capital  and 
labor. 

The  writer  has  not  had  time  for  any  exhaustive  study 
of  works  upon  political  economy  ;  he  has  been  obliged  to 
develop  his  own  conceptions,  first,  through  observation 
of  the  facts  governing  industry,  subsequently  by  referring 
to  the  books  of  reference  in  order  to  determine  in  what 
measure  the  previous  theories  of  the  economists  might 
prove  to  be  consistent  with  the  facts.  Having  reached 
the  conclusion,  at  a  very  early  period  in  his  own  observa- 
tions, that  all  profits,  wages,  earnings,  rents,  interest,  taxes, 
and  stealings  were  derived  from  the  joint  product  of  capi- 


HIGH   WAGES  AND  LOW  COST.  l6l 

tal  and  labor,  and  that  wages  were  not  derived  from  a 
division  of  capital  previously  set  apart  as  a  wage  fund,  he 
found  the  first  conception  of  this  development  of  a  theory 
of  wages,  in  any  complete  or  logical  manner,  in  the  works 
of  the  late  Prof.  J.  E.  Cairnes  ;  it  has  subsequently  been 
very  exhaustively  treated  by  Dr.  Francis  A.  Walker.  It 
may  now  be  held  to  have  displaced  the  former  theory  of 
the  wage  fund  in  all  progressive  economic  thought.  Deal- 
ing with  wages  from  this  point  of  view  the  facts  are,  or 
appear  to  be,  as  follows.  The  tendency  of  industrial  pro- 
gress is  manifold : 

1st.  In  all  arts  which  are  above  mere  handicraft  or 
mere  manual  labor,  less  capital  is  required — using  the 
word  capital  as  that  part  of  the  previous  product  which  is 
put  to  reproductive  use — in  ratio  to  a  given  product,  in 
just  the  measure  that  the  capital  invested  in  tools,  imple- 
ments, and  machinery  becomes  more  effective. 

2d.  As  the  capital  becomes  more  effective,  and  in  some 
cases  more  automatic,  it  can  be  operated  by  persons  of  a 
lower  grade  in  their  general  intelligence  than  it  could 
before.  Such  persons  can  be  trained  to  special  aptitude 
in  the  use  of  machines  in  given  directions,  so  as  to  bring 
about  a  constantly  increasing  product,  while  those  of 
greater  capacity  are  enabled  to  take  up  higher  or  less 
arduous  occupation. 

3d.  With  this  increasing  product  at  lessening  cost, 
consumption  is  increased  and  a  wider  market  is  opened. 

4th.  As  that  wider  market  is  developed,  while  prices 
may  be  diminished,  the  margin  above  the  cost  of  such 
larger  production — that  is  to  say,  above  that  which  will 
sufifice  to  remunerate  both  capital  and  labor — becomes 
larger,  even  though  it  be  a  lessening  proportion  of  each 
unit  of  product. 

5th.     With  this  increase  of  product  ensues  a  larger  and 


l62  TAXATION-  AND    WORK. 

larger  excess  over  and  above  the  immediate  necessities 
of  the  mass  of  the  people  for  mere  provision  for  shelter, 
food,  and  clothing.  This  excess  constitutes  that  which  is 
set  aside  or  saved  as  capital  to  be  applied  to  further  pro- 
duction. 

6th.  As  this  excess  becomes  greater  and  greater  in 
ratio  to  the  absolute  need  for  mere  shelter,  food,  and 
clothing,  competition  arises  among  those  who  possess  it 
to  apply  it  to  further  productive  use  ;  then  with  this 
steadily  increasing  competition  of  capital  with  capital 
there  comes  a  tendency  of  profits  to  a  minimum. 

7th.  On  the  other  hand,  there  also  arises  a  careful  selec- 
tion of  that  particular  place  where  the  natural  resources 
or  surroundings  are  most  favorable,  and  there  also  arises 
a  competition  among  capitalists  to  secure  the  services  of 
the  most  effective  workmen  and  to  induce  them  to  mi- 
grate to  that  point  where  the  best  conditions  are  to  be 
found  for  any  given  product  and  where  they  may  earn 
the  highest  wages. 

8th.  This  kind  of  competition  tends  to  enable  the 
workman  to  attain  higher  and  higher  Avages  in  other  arts 
and  thus  to  yield  to  the  workman  an  increasing  share  of 
an  increased  product. 

In  this  sequence  of  events  we  find  a  rule  that  differs 
slightly  from  that  laid  down  by  Carey  and  Bastiat  about 
which  there  was  great  contention  as  to  who  might 
claim  to  have  first  stated  it.  That  rule  was  this — quoting 
by  memory  :  "  in  proportion  to  the  increase  of  capital, 
the  share  of  product  falling  to  the  capitalist  may  be  aug- 
mented absolutely  but  it  will  be  diminished  relatively, 
while  the  share  falling  to  the  workman  will  be  increased 
both  absolutely  and  relatively."  This  proposition  may 
rightly  be  amended  so  that  it  may  be  stated  :  "  in  propor- 
tion to  the  increasing  effectiveness  of  capital  these  results, 


HIGH    WAGES  AND  LOW  COST.  163 

i.e.2i  lesser  margin  of  profit  and  higher  wages,  will  follow, 
without  regard  to  the  money  value  of  such  capital  which 
would  ordinarily  be  comprehended  under  the  term 
increase," 

In  order  to  avoid  all  confusion  by  reference  to  esti- 
mates in  terms  of  money,  one  may  state  this  rule  in  the 
following  form :  in  proportion  to  the  application  of 
science,  invention,  and  skilled  labor  to  the  arts  of  produc- 
tion the  product  will  be  increased,  the  share  falling  to  the 
owner  of  the  capital  will  be  relatively  diminished  in  ratio 
to  the  joint  product,  but  the  share  falling  to  the  skilled 
workman  will  be  augmented  both  absolutely  and  also  rela- 
latively  to  the  joint  product. 

As  I  have  previously  stated,  my  observation  led  me  to 
remark  the  tendency  of  profits  and  interest  to  become  a 
lessening  share  in  every  art  which  has  been  consistent 
with  a  natural  or  normal  development  in  this  country — 
that  is  to  say,  consistent  with  a  development  that  has  not 
been  unduly  forced  by  tariff  legislation.  It  has  been 
observed  that  by  far  the  greater  proportion  of  the  occu- 
pations of  the  people  of  this  country  have  been  developed 
without  any  substantial  interference  from  State  or  na- 
tional laws  changing  the  direction  either  of  capital  or  of 
labor.  More  than  ninety  per  cent,  of  the  work  of  the 
people  of  this  country  is  directed  by  the  nature  of  things 
to  that  occupation  which  is  freely  chosen. 

Therefore,  in  attempting  to  observe  and  record  the  facts 
governing  these  classes  of  occupations  which  are  only 
taxed  and  not  artificially  promoted  by  duties  on  imports, 
one  may  first  deal  with  such  branches  of  agriculture  and 
the  arts  that  are  listed  as  manufacturing  arts  which  must 
be  conducted  at  home  both  for  the  home  and  foreign 
markets. 

Dealing  then  with  wheat  as  a  typical  product    of  this 


164  TAXATION  AND    IVOR  A'. 

kind,  wc  first  observe  that  in  proportion  to  the  appHca- 
tion  of  agricultural  machinery  to  this  crop  the  tendency- 
was  developed  to  change  in  a  considerable  measure  the 
place  of  production.  This  tendency  did  not  wholly  do 
away  with  wheat  production  at  the  former  centres  in  the 
States  of  New  York  and  Pennsylvania,  In  those  two 
States,  while  the  product  has  increased  even  in  recent 
years  as  a  crop  planted  in  rotation  with  others,  yet  it  has 
not  increased  proportionately  with  the  demand  and  with 
the  increasing  supply.  Wheat  production  has  established 
itself  on  prairies  upon  wide  areas  of  land  in  the  North- 
west, California,  and  elsewhere,  at  a  great  distance  from 
the  chief  market,  but  where  machinery  can  be  most 
effectively  used  and  where  the  natural  resources  have 
proved  to  be  so  great  as  to  enable  the  wheat-grower  to 
apply  the  maximum  of  the  most  effective  capital  with  the 
minimum  of  the  most  skilful  labor.  The  result  has  been 
to  overcome  the  disadvantage  of  distance  and  to  pro- 
duce wheat  at  the  highest  rates  of  wages  paid  in  that 
art  anywhere  in  the  world — yet  at  the  lowest  cost  of 
production. 

The  accounts  which  I  have  received  from  one  great 
farm  in  California  were  so  incredible  that  I  could  not 
believe  them  until  I  had  verified  the  statements  of  my 
correspondent  at  every  point.  In  the  year  1890  the 
'•  product  of  three  thousand  acres  of  land  in  California, 
which  had  been  under  cultivation  many  years  without 
any  sign  of  exhaustion,  was  54,000  bushels,  at  a  labor  cost 
of  less  than  four  cents  a  bushel.  The  result  of  the  labor 
of  one  man  for  three  hundred  days,  or  what  is  the  equiv- 
alent of  one  year's  work,  one  hundred  and  fifty  days' 
labor  of  two  men  during  the  planting  and  harvest  season, 
was  over  15,000  bushels  of  wheat  per  man  for  three  hun- 
dred days'  work. 


HIGH    WAGES  AND  LOW  COST.  1 65 

Again,  there  is  one  branch  of  cotton  manufacturing 
which  one  may  claim  to  belong  in  the  nature  of  things 
more  to  this  country  than  any  other :  that  is  the  making 
of  coarse  fabrics  in  which  the  material  is  the  element  of 
chief  importance  and  the  component  material  of  highest 
cost,  the  labor  of  conversion  into  the  fabric  being  the 
lesser.  The  manufacture  of  what  used  to  be  known  as 
"  Osnaburgs,"  for  clothing,  long  since  ceased  in  the  North- 
ern States.  It  continued  to  be  conducted  as  a  handicraft 
upon  the  plantations  of  the  South  before  the  war,  for  the 
clothing  of  slaves,  and  among  the  people  of  the  Southern 
mountains  until  a  recent  period  before  that  section  had 
been  opened  by  railways.  I  may  repeat  again  the  analysis 
of  this  work  which  I  made  at  the  Atlanta  Exposition  in 
1 88 1.  Within  the  same  room  at  that  Exposition  were  to 
be  found  representatives  of  the  people  of  the  Southern 
mountains  working  cotton  with  hand  cards,  spinning- 
wheels,  and  hand  looms ;  alongside  were  the  finest  ex- 
amples of  modern  machinery  upon  which  a  fabric  was 
manufactured  of  which  I  picked  the  cotton  in  the  field  in 
the  early  morning,  to  be  carded,  spun,  woven,  dyed,  and 
made  up  into  a  dress  suit  which  I  wore  at  a  reception  on 
the  evening  of  the  same  day. 

Calling  to  my  aid  an  expert  manufacturer  of  coarse 
yarns  from  the  North,  we  timed  the  product  of  those  who 
were  working  by  hand,  and  we  found  that  the  five  per- 
sons working  in  the  Northern  factory  on  the  same  fabric 
would  produce  one  hundred-fold  as  much.  The  five 
hand-workers  could  convert  a  few  pounds  of  cotton  into 
eight  yards  of  "  Osnaburg "  in  one  day,  working  ten  hours ; 
five  operatives  in  a  Northern  factory,  working  in  a  little 
different  proportion,  were  capable  of  producing  eight 
hundred  yards  of  the  same  fabric.  Wages  in  the  moun- 
tains at  that  time  were  said  to  be  about  twenty-five  cents 


1 66  TAXATION  AND    WORK. 

a  day,  whenever  any  hired  labor  was  called  for  or  could 
be  paid  for.  As  a  rule,  the  people  were  independent  and 
not  interdependent,  working  hard  to  supply  their  own 
meagre  wants.  At  twenty-five  cents  a  day  for  five  per- 
sons the  labor  cost  of  eight  yards  of  cloth  amounted  to 
fifteen  and  a  half  cents  per  yard.  In  the  Northern  factory 
five  persons  on  the  same  fabric,  earning  one  dollar  a  day, 
each  making  eight  hundred  yards,  reduced  the  cost  of 
labor  to  five-eighths  of  a  cent  a  yard.  This  is  an  extreme 
example  of  the  application  of  the  rule  that  the  lower  cost 
of  production  is  due  to  the  application  of  science  and 
invention  at  the  higher  rates  of  wages :  also  the  lower 
the  price  of  the  product  and  the  greater  the  abundance, 
the  more  the  benefit  to  the  consumer.  In  this  instance, 
the  cost  of  the  labor  in  the  hand-made  fabric  would  be 
twenty-five  times  the  cost  in  the  factory — the  wages  in 
the  factory  four  times  as  much  as  in  the  handicraft. 

In  Vol.  XX.  of  the  United  States  Census  of  1880  may 
be  found  the  statistics  of  wages  and  prices  more  fully 
developed  than  they  ever  had  been  before  in  any  treatise 
upon  the  subject  that  has  ever  come  to  my  knowledge. 
That  volume  was  compiled  by  Joseph  D.  Weeks  of  Pitts- 
burgh, a  gentleman  with  whom  I  differ  profoundly  in 
economic  theory,  but  whose  work  in  this  census  is  a  monu- 
ment of  industry  and  thoroughness.  For  what  reason  a 
similar  investigation  did  not  form  a  part  of  the  census  of 
1890  I  am  not  informed.  An  effort  is  now  being  made  to 
secure  a  special  appropriation  for  the  continuation  of  this 
most  important  branch  of  investigation  from  1880  to  1890 
and  in  subsequent  years.  It  is  hoped  that  this  appropria- 
tion may  be  made  and  that  this  necessary  work  may  be 
done. 

There  are  great  differences  in  the  value  of  the  statisti- 
cal data  which  are  to  be  found  in  this  volume.     It  may 


HIGH    WAGES  AND  LOW  COST.  1 6/ 

not  be  that  all  the  statements  can  be  applied  in  demon- 
strating the  rule  under  consideration,  for  the  reason  that 
in  respect  to  a  great  many  articles  of  manufacture  there 
have  been  changes  in  the  type  of  the  product,  in  the 
quality,  in  the  style  or  fashion,  and  in  many  other  ways  ; 
yet  one  who  knows  how  to  select  articles  for  analysis 
from  among  the  many  upon  which  reports  are  made  in 
this  volume  will  find  a  great  number  of  examples  of  the 
rule  of  higher  wages  and  lower  cost  of  production.  Take, 
for  instance,  coarse  sheeting,  commonly  known  as  standard 
sheeting,  which  has  been  made  of  the  same  weight  and 
quality  for  more  than  fifty  years.  I  have  frequently  cited 
this  example.  The  farmers'  daughters  of  New  England 
who  first  entered  the  cotton  mill  forty  to  fifty  years  ago, 
in  order  to  improve  their  narrow  and  laborious  conditions 
of  life,  worked  thirteen  to  fourteen  hours  a  day  on  ma- 
chinery which  was  very  far  from  being  automatic,  and 
which  required  a  high  standard  of  intelligence  to  work  it 
at  all,  producing  on  the  average  in  one  year  about  five 
thousand  yards  for  each  operative  engaged,  either  in  card- 
ing, spinning,  or  weaving.  Their  earnings  upon  the 
average  were  one  hundred  and  seventy-five  dollars  per 
year  while  engaged  in  this  arduous  work.  The  factory 
was  low-studded,  badly  lighted,  and  ill  ventilated.  At 
the  present  time  a  class  of  operatives,  who  could  not  have 
worked  upon  the  machinery  forty  to  fifty  years  ago  be- 
cause it  demanded  more  individual  skill,  are  now  engaged 
in  the  same  branch  of  manufacture.  They  work  ten  hours 
a  day,  and  in  that  period  of  labor  they  earn  in  each  year 
over  $300.  The  average  product  is  thirty  thousand  yards 
for  a  year's  work ;  the  capital  is  more  effective,  but  has 
been  lessened  in  money  valuation  ;  the  labor  is  less  ardu- 
ous ;  the  price  of  the  goods  to  the  consumer  is  much 
lower.     Herein  we  have  a  complete  example  of  a  lessening 


1 68  TAXATION  AND    WORK. 

margin  of  profit,  an  increase  of  product,  lower  prices  to 
the  consumer,  and  higher  wages  both  in  money  and  what 
money  will  buy  to  the  working  men  and  the  working 
women. 

Among  the  many  examples  of  reduction  in  cost,  accom- 
panied by  higher  rates  of  wages  to  be  found  in  Vol.  XX., 
I  may  cite  the  following  articles,  which  serve  strictly 
useful  purposes,  and  which  must  have  been  made  through- 
out the  period  covered  by  the  dates  of  uniform  and  good 
quality.  In  very  many  instances,  however,  the  quality 
has  been  improved,  while  the  cost  has  been  reduced  and 
the  wages  have  been  augmented. 

Glass   Tumblers. 

Average  earnings  in  i860  of  14  classes  of  operatives,  each  per  day,      $1.22 

Price  per  dozen  tumblers $1.50  to  1.25 

Average  earnings  in  1880  of  the  same  classes,  each  per  day. .....         1.63 

Price  per  dozen  tumblers 30  cts.  to  25  cts 

Edge  Tools. 

Average  wages  in  i860  of  ii  classes  of  workmen,  each  per  day. . . .  $1.92 

Price  of  chopping-axes  per  dozen i l.oo 

Average  wages  in  1880  of  11  classes  of  workmen,  each  per  day  ....  2.26 

Price  of  chopping-axes  per  dozen 8. 50 

Carriages  and  Wagons. 

Average  wages  in  i860  of  10  classes  of  workmen,  each  per  day. ...  $1.71 

Price  of  a  spring  wagon 1 50.00 

Average  wages  in  1880  of  10  classes  of  workmen,  each  per  day. . . .  2.16 

Price  of  a  spring  wagon 115.00 

Milling  Wheat. 

Average  wages  in  i860  of  10  classes  of  workmen,  each  per  day $1.31 

Labor  cost  per  barrel  of  flour 78  cts, 

Average  wages  in  1880  of  10  classes  of  workmen,  each  per  day. . .  $2.19 

Labor  cost  per  barrel  of  flour 52  cts. 

Furniture. 

Average  wages  in  1865  of  11  classes  paid  in  greatly  depreciated 

paj^er  money,  each  per  day ' ' $2.45 

Price  of  common  extension  tables  per  foot 1.56 

Cost  of  labor  per  unit  of  product 35  cts. 

Average  wages  in  1880  of  11  classes,  paid  in  gold,  each  per  day. . .  $2.45 

Price  of  common  extension  tables  per  foot I.IO 

Cost  of  labor  per  unit  of  product 31  cts. 


HIGH    WAGES  AND  LOW  COST.  169 

Since  1880  there  has  been  a  further  reduction  in  the 
cost  and  price  of  most  useful  products,  and  an  advance  in 
the  rate  of  wages  computed  at  ten  to  thirty  per  cent., 
according  to  the  relative  skill  required  in  the  work. 

These  examples  prove  the  rule  which  is  based  upon  an 
economic  principle,  to  wit :  that  in  proportion  to  the  ap- 
plication of  science  and  inventions  to  the  useful  arts  under 
free  conditions  of  trade  such  as  prevail  among  the  States 
of  this  Union,  low  prices  and  high  ivages  are  the  necessary 
consequence  or  result  of  a  low  cost  of  production. 

Were  the  conditions  of  trade  as  free  with  foreign  coun- 
tries as  they  are  among  our  own  States,  the  same  rule 
would  apply,  and  this  country  would  control  the  commerce 
of  the  world,  because  the  rates  of  wages  earned  here  from 
the  largest  product  of  useful  goods  and  wares  would  be 
the  result  of  our  low  cost  of  production.  Corollary  :  That 
country  in  which  the  rates  of  wages  are  the  highest  has 
the  greatest  motive  for  establishing  Free  Trade  with  all 
others,  whatever  the  tariff  system  of  other  countries  may 
be. 


CHAPTER  XXIII. 
The  Use  of  Machinery  by  Nations. 

It  may  now  be  expedient  to  develop  and  describe  some 
of  the  advantages  of  this  country  in  comparison  with 
other  machine-using  nations  in  order  to  determine  in  what 
those  advantages  consist  and  to  what  extent  the  power 
of  this  country,  therefore,  exists  to  supply  an  increasing 
proportion  of  food  to  nations  or  States  that  cannot  pro- 
vide the  quantity  or  quality  required  for  their  own  con- 
sumption, also  to  determine  how  far  our  power  now  exists 
or  may  be  developed  to  meet  the  demand  of  the  non- 
machine-using  nations  of  the  world  with  manufactured 
goods,  metal-work,  and  other  fabrics. 

It  may  be  observed  that  the  application  of  machinery 
to  production  had  been  brought  about  in  greatest  measure 
in  Great  Britain  until  a  recent  period.  The  application  of 
machinery  and  of  modern  tools  and  appliances  has  since 
been  developed  in  the  United  States  more  effectively  and 
universally  within  the  present  generation.  We  now  stand 
at  the  head  among  nations  in  labor-saving  processes. 
Among  European  countries,  France  (including  Belgium) 
stands  next  to  Great  Britain,  Germany  comes  third,  the 
Netherlands  fourth,  while  Italy,  Austria,  and  Spain  follow 
at  long  distance  behind  their  continental  competitors; 
Russia,  in  view  of  the  handwork  of  her  peasantry,  can 
hardly  be   counted  as  a  machine-using  nation,  although 

170 


THE    USE   OF  MACHINERY  BY  NATIONS.  I'/l 

under  an  almost  prohibitive  system  of  duties  a  little 
unhealthy  progress  has  been  made. 

The  very  slight  impression  that  modern  mechanism  has 
made  in  India  is  of  little  account,  while  in  China  hand- 
work is  the  rule,  almost  without  exception. 

It  may,  therefore,  be  observed  that  the  chief  competi- 
tion in  the  supply  of  non-machine-using  nations  with  the 
useful  fabrics  of  common  consumption  that  are  made  by 
machinery,  rests  between  the  United  States  and  Great 
Britain.  The  population  of  the  United  States  is  now 
about  sixty-five  millions,  Canada  may  be  classed  with  this 
country  in  view  of  the  certainty  that  within  a  very  short 
time  the  grotesque  absurdity  of  tariff  barriers  will  become 
apparent  when  a  commercial  union  will  ensue.  There 
are  about  thirty-three  millions  in  England  and  Scotland  ; 
four  and  a  half  millions  in  Ireland. 

The  other  machine-using  populations  of  the  continent 
of  Europe  number  substantially  as  follows : 

France  and  Belgium 45,000,000 

Germany  and  the  Netherlands 50,000,000 

Total 95,000,000 

The  States  which  have  applied  machinery  in  some  small 
measure,  and  which  may  share  with  the  principal  machine- 
using  nations  in  the  production  of  useful  articles  by 
modern  methods,  mainly  for  home  consumption,  are  : 

Italy,  population 30,000,000 

Austria,  Hufigary 41,000,000 

Spain  and  Portugal 23,000,000 

Total 94,000,000 

Sweden  and  Norway  compete  in  ocean  transportation, 
but  may   be   set  aside   with  Russia,  numbering  together 


1/3  TAXATION  AND    WORK. 

about  one  hundred  millions,  from  any  effective  competi- 
tion in  the  supply  of  other  parts  of  the  world  with 
machine-made   fabrics. 

We  may  therefore  classify  nations  in  their  effective 
application  of  machinery  to  production  for  the  general 
consumption  of  the  world  upon  the  following  lines: 

1st.     Tlie  United  States  and  Canada,   with  a  population 

numbering 70,000,000 

Producing  a  great  excess  of  food  and  endowed  with  coal,  iron 
ore,  timber,  phosphate  deposits,  petroleum,  and  other  natural 
deposits  in  huge  abundance,  far  in  excess  of  present  home 
consumption. 

2d.     Great  Britain,  33,000,000;  Ireland,  4,500,000 37,500,000 

Endowed  with  coal,  of  which  the  supply  at  moderate  cost, 
especially  of  the  varieties  of  coking  coal  required  in  metal- 
lurgy, is  approaching  exhaustion  :  endowed  also  with  a  large 
quantity  but  deficient  variety  and  quality  of  iron  ores  ;  now 
dependent  upon  other  countries  for  more  than  one  half  the 
food  supply. 

3d.  France  and  Belgium,  Well  endowed  with  good  land 
and  capable  of  producing  a  small  excess  of  food  in  a  favor- 
able season,  deficient  in  timber,  endowed  with  a  fair  supply  of 
ores  and  coal  insufficient  for  domestic  consumption 45,000,000 

4th.  Germany  and  the  Netherlands.  Endowed  with  a 
small  area  of  good  soil  and  a  large  area  of  poor  quality,  de- 
ficient in  food  supply  and  exposed  to  great  scarcity  in  a  bad 
season,  deficient  in  timber,  possessing  a  very  limited  supply 
of  coal  and  a  moderate  supply  of  iron  ores  of  low  grade 50,000,000 

Total 202,500,000 

Within  this  small  limit  of  one-seventh  of  the  popula- 
tion of  the  globe  is  to  be  found  the  only  effective 
application  of  modern  science  and  invention  on  any 
considerable  scale,  such  as  may  entitle  them  to  be  in- 
cluded as  in  any  sense  among  nations  competing  with 
each  other  in  the  service  of  other  nations,  by  the  apphca- 
tion  of  machinery. 


THE    USE   OF  MACHINERY  BY  NATIONS.  1 73 

Russia,  Sweden,  and  Norway  may  be  set  apart,  not  to  be 
counted  as  effective  in  competition , 100,000,000 

Italy,  Austria,  Hungary,  Spain,  and  Portugal,  serving  other 
countries  in  moderate  measure  with  iron  ores,  grain,  and 
wine,  but  on  the  whole  not  to  be  counted  as  effective  com- 
petitors in  the  application  of  machinery 94,000,000 

Total 194,000,000 

There  remain  the  populations  of  Asia,  Africa,  Australa- 
sia, South  America,  Central  America,  and  Mexico,  con- 
taining a  population  of  over  one  thousand  million  people 
(1,000,000,000),  whose  resources  have  only  been  developed 
by  the  railway  and  steamship  within  a  single  generation, 
and  whose  application  of  modern  mechanism,  aside  from 
methods  of  transportation,  is  in  its  very  infancy. 

Endowed  with  unlimited  power  to  supply  by  handwork 
crude  materials  in  exchange  for  the  products  of  machinery, 
these  people  stand  waiting  to  exchange  their  products 
with  those  nations  who  will  work  them  into  the  machine- 
made  fabrics  that  they  require.  They  will  give  ten, 
twenty,  and  even  in  some  cases  one  hundred  days  of  hand- 
work in  exchange  for  one  day's  work  of  one  man  or 
woman  occupied  in  the  direction  of  modern  machinery. 
We  obstruct  and  try  to  stop  this  mutual  service. 

Great  Britain  admits  these  crude  materials  wholly  free 
of  taxation.  France,  Germany,  Belgium,  and  Holland 
almost  wholly  free. 

The  United  States,  at  the  dictation  of  the  Unholy  Al-i 
llance  of  Pig-iron,  Wool,  and  Silver,  taxes  them  heavily, 
and  thus  extends  the  benefit  of  her  tariff  protection  to  the 
manufacturers  of  Europe  while  crippling  her  own. 

It  will  be  observed  that,  with  the  exception  of  France, 
all  European  machine-using  States  import  a  large  part  of 
their  necessary  food  ;  depending  on  other  countries  in 
greater  measure  than   they    export    food   products.      In 


174  TAXATTOA^  AMD    WORK, 

years  when  the  harvest  is  not  plentiful,  even  France  is 
somewhat  dependent  upon  other  countries  for  food.  The 
attempt  to  protect  the  farmers  of  France  and  Germany 
by  duties  upon  the  import  of  grain  and  meat  has  proved 
to  be  futile,  and  to  the  extent  in  which  it  has  been  a  suc- 
cess in  maintaining  the  prices  of  food  higher  than  they 
would  have  been,  it  is  a  disadvantage  to  the  consumers, 
especially  to  those  engaged  in  the  application  of  machin- 
ery to  the  arts  of  manufacturing. 

Chancellor  Caprivi  rendered  the  verdict  upon  the  Mc- 
Kinleyism  of  Germany  in  a  recent  speech  to  which  refer- 
ence will  again  be  made.  I  can  only  quote  a  few  detached 
paragraphs. 

"German  agriculture  is  in  a  bad  way.  .  .  .  It  is  undoubtedly  true 
that  these  high  protective  duties  have  not  done  for  the  farmer  what  was 
expected  of  them.  .  .  .  They  have  only  given  Protection  when  these  high 
duties  coincided  with  periods  of  calamity  or  short  crops  in  other  countries. 
.  .  .  Even  if  we  were  willing  to  continue  under  our  existing  system,  the 
continual  struggle  for  existence  would  force  Germany  to  give  up  one  industry 
after  another.  .  .  .  We  have  overreached  ourselves.  .  .  .  Should  we 
imitate  the  tendency  which  prevails  in  Russia,  America,  and  France,  and 
keep  ourselves  in  isolation  from  other  nations  the  consequences  of  such  a 
fatal  step  would  be  a  war  of  all  against  all.  .  .  .  It  is  not  a  question  here 
whether  we  want  Free  Trade  or  Protection.  The  sole  question  is  to  find  out 
the  way  of  maintaining  our  agriculture  and  maintaining  our  industries  at  a 
reasonable  profit,  so  that  they  may  live  and  give  work  to  the  laborers.  .  .  . 
We  are  inevitably  compelled  to  an  exchange  of  goods  with  other  countries. 
.  .  .  We  must  export  goods  or  people.  .  .  .  The  object  of  this 
measure  is  to  ensure  peace  without  the  least  aggressive  aim." 

Chancellor  Caprivi  has  been  obliged  to  resign  on  the 
question  of  the  control  of  the  public  education  ;  but  the 
policy  of  the  Drcibund  treaty  for  mutual  service  between 
Germany,  Austria,  Hungary,  and  Italy  is  established. 

It  will  also  be  observed  that  the  only  countries  in 
Europe  which  have  a  positive  assurance  of  an  abundant 
food  supply  by  production  or  purchase  are  Great  Britain 


THE    USE   OF  MACHINERY  BY  NATIONS.  1 75 

and  Holland,  which  are  the  only  so-called  Free  Trade 
countries. 

The  purpose  of  this  analysis  is  to  call  attention  to  what 
at  first  seems  to  be  a  very  singular  fact — to  wit,  that  the 
only  call  for  the  protection  of  a  high  tariff  in  this  country 
or  in  any  European  State  is  directed  against  the  competi- 
tion of  the  countries  that  are  well  furnished  with  a  most 
abundant  supply  of  food  either  by  production  or  ex- 
change. Our  own  tariff  has  been  framed  mainly  for  the 
purpose  of  obstructing  imports  from  Great  Britain,  which 
is  the  best-fed  nation  in  Europe.  France  and  Germany 
have  resisted  the  import  free  of  duty  both  of  the  products 
of  agriculture  and  of  manufactured  goods  from  the  United 
States,  which  is  the  best-fed  nation  in  the  world  ;  they 
also  resist  the  import  of  the  manufactures  of  Great  Britain 
which  stands  next  to  the  United  States  in  its  adequate 
supply  of  food ;  the  one  produces  the  excess  of  food  that 
the  other  requires  and  imports  free  from  taxation.  If  our 
trade  were  as  free  with  Great  Britain  as  it  is  among  our 
several  States,  to  the  end  that  each  country  could  supply 
itself  with  its  relative  wants  by  the  exchange  of  its  food 
and  other  products,  there  would  not  be  a  shadow  of 
chance  for  any  other  machine-using  nation  on  the  conti- 
nent of  Europe  to  enter  into  competition  upon  any 
extensive  scale  with  the  manufactured  goods  of  this 
country  or  Great  Britain  in  the  supply  of  the  non-manu- 
facturing nations  of  the  world. 

One  of  the  reasons  which  I  may  assign  in  explanation 
of  this  condition,  to  wit,  that  any  competition  with  the 
well  paid  and  highly  fed  English-speaking  people  of  Eu- 
rope and  America  is  impracticable  is  in  the  mere  fact  that 
they  are  well  fed.  We  may  reason  upon  this  subject  by 
analogy  ;  a  steam-engine  may  be  of  the  very  best  type, 
the  boiler  made  of  the  best  kind  and  rightly  set  up  ;  still, 


1/6  TAXATION  AND    WORK. 

if  the  fuel  is  deficient,  the  supply  of  energy  will  be  di- 
minished in  a  proportion  vastly  greater  than  the  meas- 
ure of  the  pounds  of  fuel  wanting.  In  other  words,  the 
steam-engine  must  be  worked  at  its  full  standard  and  must 
be  supplied  with  fuel  adequate  to  that  standard,  or  else 
it  will  do  very  ineffectual  service.  The  engine  must  not 
only  have  its  full  supply  of  fuel,  but  it  must  have  the 
right  kind  furnished  in  due  proportion. 

As  coal  supplies  energy  to  the  steam-engine  so  food 
supplies  energy  to  the  human  engine.  Food  must  be 
sufificient  in  quantity ;  it  must  be  rightly  prepared,  and 
it  must  be  of  the  right  quality  and  kind.  This  supply  of 
food  is  far  more  complex  than  the  problem  of  the  supply 
of  fuel  required  by  the  steam  boiler.  Even  the  quantity 
may  apparently  suffice,  but  if  the  nutrients  are  not  in 
right  proportion,  the  man  may  almost  starve  and  may  be 
wholly  incapable  of  effective  work.  These  nutrients  con- 
sist in  certain  proportions  of  the  hydro-carbons,  or 
starchy  materials ;  of  fats,  which  are  derived  from  ani- 
mal or  vegetable  products ;  and  of  nitrogenous  materials, 
scientifically  called  Proteids,  which  are  derived,  in  princi- 
pal measure  from  meat,  but  may  be  derived,  where  meat 
is  lacking,  from  the  leguminous  products  of  the  field,  such 
as  peas,  beans,  and  the  like,  and  also  from  cheese.  The 
nitrogenous  element  in  food  is  the  one  by  which  muscular 
f  energy  and  power  of  work  are  mainly  supported.  If 
this  element  is  deficient,  the  nation  wherein  it  is  deficient 
will  be  incapable  of  the  highest  measure  of  production  and 
will  be  apt  to  have  its  working  force  classified  under  the 
head  of  "pauper  laborers."  In  other  words,  it  begins  to 
appear  that  the  whole  body  of  pauper  labor  of  nations  and 
States  upon  the  continent  of  Europe  is  as  a  rule  under- 
fed or  ill-fed  labor,  the  deficiency  being  mainly  in  the 
element  of  nitrogen  •  that  is  to  say,  in  the  special  nutrient 


THE    USE   OF  MACHINERY  BY  NATIONS.  lyj 

from  which  the  working  energy  of  man  is  mainly  derived 
or  without  which,  whatever  may  be  the  abundance  of 
starch  and  fat,  muscular  energy  and  the  power  of  continu- 
ous application  to  any  kind  of  work  will  be  wanting. 

In  the  matter  of  food,  the  problem  of  this  country  is  to 
stop  the  waste  of  our  abundance,  the  problem  in  England 
is  how  to  keep  up  an  abundance  by  exchange,  the  problem 
in  France  how  to  distribute  and  convert  into  food  a  fairly 
adequate  supply  of  food  material,  the  problem  in  Ger- 
many how  to  supply  the  army  without  impairing  the 
power  of  the  people  to  work,  the  problem  in  Italy  how  to 
avoid  starvation,  the  problem  in  Russia  how  to  cope  with 
famine. 

If  we  follow  this  sequence  it  becomes  apparent  that 
the  rates  of  wages  or  earnings  of  the  working  people 
rest  either  upon  the  adequacy  of  the  supply  of  food  as 
an  antecedent,  or  follow  downward  with  the  increasing 
deficiency  of  food  in  the  order  given.  Using  figures  as 
mere  symbols  and  not  as  measures  of  the  differences,  and 
yet  not  varying  very  much  in  their  proportion  as  a  meas- 
ure of  relative  conditions,  the  rule  of  cause  and  effect  or  of 
effect  and  cause  may  be  defined  in  the  following  series : 

As  the  supply  of  food  is  represented  by  the  high  num- 
bers so  is  the  rate  of  wages.  As  the  supply  of  food  dimin- 
ishes so  does  the  rate  of  wages  lessen. 


Proportionate    ) 

i    Proportionate 

supply  of       >•      t 

o      ■<          rate  of 

food.           ) 

(          wages. 

United  States, 

as  6 

to  6 

Great  Britain, 

as  5 

to  5 

France  and  Belgium 

,      as  4 

to  4 

Germany, 

as  3 

to  3 

Italy, 

as  2 

to  2 

Russia, 

as  I 

to  I 

There  is,  however,  one  class  of  the  population  of  each 
country  which  must  be  and  is  supplied  not  only  with  food 


178  TAXAT/OiV  AND    IVOR  A'. 

but  with  an  adequate  supply  of  the  nitrogenous  element 
to  keep  it  in  full  working  condition,  even  if  the  work 
of  the  rest  suffers. 

The  masses  must  yield  even  to  starvation  in  order  that 
the  classes  in  the  armies  and  navies  may  be  well  nourished. 
When  nations  are  listed  in  ratio  to  the  proportion  of  neces- 
ary  food  which  is  wasted  in  passive  war,  the  foregoing  order 
is  reversed. 

The  sequence  is  as  follows,  interpolating  Austria  which 
has  a  fair  supply  of  food,  yet  is  forced  to  waste  it  in  great 
preparations  for  war. 


Russia          wastes 

Italy 

Austria             ' ' 

as  6 
as  5 
as  4 

wages  I 
2 

"      3 

Germany          ' ' 
France              " 

as  3 
as  2 

"      4 

"      5 

Great  Britain   " 

as  I 

"      6 

United  States  wastes 

0 

because  we  keep  our  army  usefully  employed  as  a  border 
police,  and  we  waste  but  little  more  money  on  the  navy 
than  is  necessary  to  keep  up  our  communications  by  swift 
cruisers  with  our  foreign  ministers  and  consuls.  There- 
fore our  wages  are  highest,  being  derived  from  the  most 
abundant  product. 

The  supreme  importance  of  the  food  problem  has  been 
foreseen  in  Germany  more  than  in  any  other  country.  In 
the  recent  epoch-makingspeechof  the  German  Chancellor, 
Caprivi,  previously  quoted,  in  support  of  the  reciprocity 
treaty  with  Austria  and  Italy,  he  said  : 

"  All  that  we  import  from  outside  nations  w-e  need  ;  it  consists  mainly  of 
indispensable  articles  of  food  and  of  raw  products  for  our  industries." 

"  .  .  ,  In  the  past  years,  when  I  was  a  soldier  myself  I  formed  the 
unshaken  conviction  that  in  any  future  war  the  question  of  feeding  the  army 
of  the  country  would  play  a  most  important  role." 

That  which  was  so  apparent  to  Chancellor  Caprivi  when  he 
was  a  soldier,  became  the  chief  work  of  Count  von  Moltke 


THE    USE    OF  MACHINERY  BY  NATIONS.  1 79 

and  the  German  Staff,  and  it  was  the  German  army  sau- 
sage, compounded  in  the  right  proportions  of  nutri- 
ents in  the  smallest  and  lightest  compass,  that  enabled 
the  soldier  to  make  a  strong  broth  in  his  camp  kettle 
wherever  he  encamped,  and  thus  rendered  possible  the 
great  concentration  of  troops  at  Sedan,  and  made  the 
siege  of  Metz  an  assured  victory. 

That  great  army  must  still  be  sustained  in  full  strength 
even  though  the  supply  of  food  for  the  working  people 
of  Germany  has  become  so  deficient  that  the  water  in 
which  the  meat  sausage  of  one  man  has  been  boiled,  pos- 
sesses a  commercial  value  and  is  sold  to  the  next  man 
who  has  no  sausage  to  boil,  but  is  nourished  with  black 
bread  even  in  the  rich  city  of  Frankfort. 

Within  a  few  years  the  relation  of  the  cost  of  food  to 
earnings  has  begun  to  be  examined  by  scientific  methods. 
Enough  is  known  to  state  the  case  in  a  general  way.  The 
proportionate  cost  of  an  inadequate  supply  of  food  in  the 
families  of  working  people  upon  the  continent  of  Europe 
is  from  55  to  70  per  cent,  of  their  meagre  incomes;  in- 
creasing in  ratio  as  the  income  diminishes.  In  the  eastern 
part  of  the  United  States  the  cost  of  a  wasteful  supply  is 
about  50  per  cent,  of  the  average  earnings  of  average 
mechanics  and  artisans.  In  the  West  it  is  much  less  and 
may  even  run  below  40  per  cent. 

I  have  lately  made  a  beginning  in  establishing  the  data 
of  comparative  nutrition. 


CHAPTER  XXIV. 

The  Waste  of  Armies. 

The  reasons  for  the  admission  free  of  duty  of  the  crude 
materials  which  are  necessary  in  the  processes  of  domes- 
tic industry  have  been  fully  treated  and  will  not  be  again 
referred  to  in  this  series.  The  practical  absurdity  of 
attempting  to  give  tariff  protection  to  the  farmers  of  this 
country  has  been  dealt  with.  The  separation  has  been 
made  between  those  branches  of  the  mechanic  arts  and 
manufactures  which  must  in  the  nature  of  things  be  con- 
ducted within  the  limits  of  our  own  country  and  those  of 
which  a  product  of  like  kind  might  be  imported.  The 
nations  which  have  applied  modern  machinery  to  produc- 
tion have  been  distinguished  and  set  apart  from  those 
which  have  been  classed  as  the  non-machine-using  nations. 
The  reasons  have  been  given  why  those  nations  who  have 
applied  modern  science  and  invention  to  the  greatest 
natural  resources  have  attained  a  dominant  position  in 
manufactures  and  in  commerce  by  supplying  the  people 
of  other  countries  with  goods  made  at  a  relatively  low 
cost  of  production  as  compared  to  the  conditions  of  the 
nations  which  they  supply  and  yet  at  much  higher  rates 
of  wages.  Reasons  have  been  given  why  the  effectiveness 
of  labor  is  proportionate  to  the  supply  of  food  ;  or  even 
proportionate  to  the  supply  of  that  part  of  the  food  which 
yields  nitrogen,  which  is  the  most  costly  and  most  neces- 

i8o 


THE    WASTE   OF  ARMIES.  l8l 

sary  source  of  physical  energy  and  of  the  power  to  main- 
tain continuous  work  or  labor. 

Upon  a  final  analysis  of  all  these  conditions,  the  actual 
competition  among  nations  has  been  narrowed  down  to 
four  groups  of  States :  to  wit,  the  United  States,  Great 
Britain,  France  including  Belgium,  and  Germany  includ- 
ing Holland. 

Were  it  not  for  the  assumed  necessity  of  protecting  the 
domestic  industry  and  the  home  labor  of  this  country 
from  the  competition  of  the  people  of  the  three  geo- 
graphical divisions  named  in  this  list,  one  may  rightly 
affirm  that  there  never  would  have  been  any  tariff  ques- 
tion in  the  sense  in  which  that  term  is  commonly  used  in 
this  country.  The  attempt  to  exclude  wool  and  other 
crude  products  would  never  have  been  suggested  and  the 
present  contest  would  never  have  happened.  In  a  final 
treatment  of  the  question  we  may  therefore  narrow  it 
down  to  a  consideration  of  the  relative  conditions  of  the 
countries  named. 

With  respect  to  the  three  European  sections  compris- 
ing three  great  States  and  two  small  ones  it  will  be  ob- 
served that  Great  Britain  is  called  a  free-trade  country, 
using  that  term  not  in  a  scientific  but  in  a  practical  way. 
The  duties  which  Great  Britain  imposes  upon  imports  are 
substantially  limited  to  spirits,  wines,  tobacco,  tea,  coffee, 
and  dried  fruits.  They  are  imposed  wholly  for  revenue 
purposes,  and  in  respect  to  spirits  and  fermented  liquors 
are  balanced  by  internal  taxes  on  the  same  articles. 

Holland  was  the  typical  free-trade  country  of  Europe 
down  to  the  period  when  under  the  domination  of  Na- 
poleon a  huge  debt  was  imposed  upon  this  small  state 
which  rendered  recourse  necessary  to  duties  upon  imports. 
Belgium  imposes  moderate  duties  for  revenue  only,  with 
careful  discrimination.      Germany  under  Bismarck's  rule 


1 82  TAXAT/OiV  AMD    WORK'. 

was  subject  to  a  high  tariff,  which,  having  failed  to  pro- 
duce the  expected  results  is  now  being  rapidly  modified. 
France  is  subject  to  very  high  duties  upon  imports  with 
countries  with  which  she  has  not  negotiated  commercial 
treaties  ;  not,  however,  as  high  as  our  own.  In  all  these 
states  the  crude  materials  which  are  necessary  in  the 
processes  of  their  domestic  industry  are  substantially 
free  from  duties  and  each  possesses  a  considerable  for- 
eign commerce. 

Discriminating  among  them  it  will  be  remarked  that 
the  exports  from  Great  Britain  consist  mainly  of  useful 
fabrics;  the  products  of  iron,  steel,  wool,  cotton,  chemi- 
cals, and  the  like.  The  exports  of  Holland  mainly  con- 
sist in  re-shipment  of  imports  from  her  colonies  of  dairy 
products,  and  of  fresh  vegetables  to  Great  Britain.  The 
exports  of  France  mainly  consist  of  wines,  silks,  and 
finished  goods  which  depend  more  upon  fashion  and  style 
than  they  do  upon  utility  for  their  market.  The  exports 
of  Belgium  consist  either  of  very  cheap  goods,  produced 
mainly  by  handicraft ;  or  of  very  costly  goods,  like  Brus- 
sels lace,  which  are  wholly  the  product  of  the  lowest 
priced  hand  labor,  barely  earning  a  wretched  and  miser- 
able subsistence.  The  exports  of  Germany  are  various 
and  have  been  greatly  increased  in  recent  years  by  the 
application  of  what  is  known  as  '*  the  basic  process  "  to 
the  iron  ores  of  Germany,  which  had  previously  been 
almost  useless  on  account  of  the  large  percentage  of  phos- 
phorus in  them. 

In  dealing  with  the  relations  of  these  countries  with 
each  other  it  will  be  remarked  that  France  and  Germany 
have  attempted  to  secure  tariff  protection  against  the 
imports  from  Great  Britain  and  from  this  country  ;  yet 
the  rates  of  wages  in  Great  Britain  are  very  much  higher 
than  they  are  in  France,  practically  double  what  they  are 


THE    WASTE   OF  ARMIES.  1 83 

in  Germany,  while  the  rates  of  wages  are  considerably- 
higher  in  this  country  than  they  are  in  Great  Britain. 

The  question  then  arises,  What  is  it  that  has  first 
given  the  chief  control  in  the  supply  of  the  non-machine- 
using  nations  with  manufactured  goods  and  wares  to 
Great  Britain,  and  what  is  it  that  might  give  a  paramount 
control  to  this  country  if  we  had  not  put  ourselves  at  a 
great  disadvantage  by  levying  a  tax  on  crude  materials  so 
as  to  maintain  the  relative  cost  of  such  materials  in  this 
country  much  higher  than  it  is  in  Great  Britain,  whatever 
the  actual  price  may  be  ? 

The  answer  to  this  question  is  very  plain.  The  para- 
mount control  of  the  commerce  of  the  world  has  been 
vested  in  Great  Britain  through  her  position,  the  stability 
of  her  monetary  system,  and  through  her  possession  of 
what  until  within  a  few  years  were  the  principal  deposits 
of  iron  and  coal  of  the  world.  Through  her  position,  and 
by  working  these  deposits  of  coal  and  iron  and  their  appli- 
cation to  machinery  and  the  manufacturing  arts,  through 
many  years  and  down  to  a  comparatively  recent  period 
protected  by  penal  laws  which  made  it  a  crime  to  disclose 
the  methods  of  the  construction  of  such  machinery,  Great 
Britain  was  enabled  to  resist  the  competition  even  of  the 
United  States.  By  her  commerce,  first  artificially  devel- 
oped, she  has  been  able  to  purchase  an  abundant  and 
ample  supply  of  food,  until  her  people  are  subsisted  to 
the  extent  of  more  than  one  half  upon  food  derived  from 
other  countries.  This  is  a  dangerous  condition.  It  is 
necessary  for  Great  Britain  to  carry  the  burden  of  her 
enormous  navy.  The  supremacy  of  Great  Britain  in  iron 
and  coal  has  passed  from  her  and  has  been  assumed  by 
the  United  States.  We  now  hold  the  key  to  the  com- 
merce of  the  world,  and  we  now  hold  the  dominant  power 
to  supply  the   non-machine-using  nations  of  the  world 


1 84  TAX  A  TION  AND   WORK'. 

with  all  kinds  of  useful  wares  and  goods,  because  we  pos- 
sess the  coal  and  iron  mines  which  can  be  worked  at  the 
lowest  cost  with  the  largest  product.  We  can  pay  the 
liighest  rates  of  wages  because  our  ores  of  coal  and  iron 
are  mined  with  the  least  expenditure  of  labor  by  the 
measure  of  time  or  days'  work.  We  produce  the  food 
and  the  cotton  which  the  world  must  buy,  because  the 
cost  is  lower  while  the  wages  of  labor  are  higher. 

I  have  said  that  we  hold  the  key  to  the  commerce  of 
the  world,  but  we  have  turned  it  so  as  to  lock  out  the 
products  upon  which  we  might  extend  our  work,  our 
product,  and  our  progress. 

Through  these  analyses  we  are  brought  again  to  the 
source  of  wages  and  to  the  distribution  of  the  joint  pro- 
duct of  labor  and  capital  from  which  all  profits,  rents, 
wages,  interest,  earnings,  taxes,  and  stealings  are  alike 
derived  or  recovered. 

Not  only  is  the  product  of  Europe  deficient  compared 
to  our  own,  but  its  distribution  is  bad. 

At  the  risk  of  repetition  of  data  that  I  have  previously 
given,  either  in  this  series  or  in  my  books  upon  the  Dis- 
tribution of  Products  and  upon  the  Industrial  Progress  of 
the  Nation,  I  must  again  present  the  facts  that  govern 
the  distribution  of  our  excessively  abundant  product  and 
of  the  meagre  supply  of  the  means  of  existence  in  Europe. 

The  motive  of  this  series  as  given  in  the  title,  Taxation 
and  Work,  are  synonymous  terms.  All  product  is  the 
result  of  all  work,  be  it  mental,  manual,  or  mechanical,  or 
a  combination  of  the  three  methods  by  which  all  work  is 
done.  All  taxation  is  derived  from  or  constitutes  a  share 
of  all  work.  Taxation  is  either  direct  or  indirect.  Direct 
taxation,  in  terms  of  work,  consists  in  the  conscription  of 
the  workman  for  enforced  service  in  armies  or  navies. 
Indirect  taxation,  in  terms  of  work,  consists  in  taking  a 
part  of  the  product  <>f  \\(>;1<  b}-  due  process  of  law. 


THE    WASTE   OF  ARMIES.  1 85 

Lawful  taxation  consists  in  taking  such  part  of  the 
products  of  work  as  may  be  necessary  for  the  conduct  of 
the  government,  by  measures  so  devised  that  all  the  work 
that  the  people  exert  in  supplying  the  means  shall  be 
secured  to  the  benefit  of  the  government,  and  shall  not 
be  diverted  for  the  support  of  private  enterprise. 

Unlawful  taxation,  making  use  of  the  terms  lawful  and 
unlawful  as  synonyms  for  right  and  wrong,  may  be  imposed 
by  measures  that  are  legal  for  taking  the  property  or  work 
of  one  citizen  and  conveying  it  to  another  under  the  forms 
of  law,  which,  nevertheless,  "  constitutes  robbery  by  a 
decree  under  such  forms  of  law." — {Loati  Association  vs. 
Topeka,  Reports  of  the  Supreme  Court.) 

Each  nation  will  be  placed  at  a  relative  disadvantage 
with  another  as  it  enforces  one  or  the  other  of  these 
methods  of  securing  work  from  the  people  of  each  State. 

This  relative  disadvantage  of  a  bad  method  of  taxation 
may,  however,  be  more  than  compensated  by  other  ele- 
ments in  the  conduct  of  affairs  governing  production  or 
by  the  possession  of  great  resources. 

The  greatest  relative  disadvantage  among  the  machine- 
using  or  manufacturing  States  of  Europe  and  America 
already  named,  consists  in  the  system  of  militarism,  or  the 
subjection  of  the  masses  to  the  support  of  the  military 
classes.  The  measure  of  this  direct  tax  upon  labor  or 
work  has  already  been  stated  in  terms  of  money ;  it  will 
now  be  given  in  terms  of  work  and  money  combined. 

Dealing  in  round  figures  and  disregarding  fractions, 
according  the  data  of  the  Statesman  s  Year  Book  of  1892, 
the  population  of  France,  Belgium,  Germany  and  Holland, 
numbers  96,000,000 ;  or  a  number  exceeding  the  popula- 
tion of  the  United  States  and  Canada,  by  thirty-seven 
per  cent.  According  to  customary  estimates  the  number 
of  men  of  arms-bearing  age  in  these  four  States,  of  which 
the  united  area  is  436,851  square  miles,  or  one-seventh  that 


lS6  TAXATION  AND   WORK. 

of  this  country  omitting  Alaska,  would  be  19,250,000, 
of  whom  1,236,000  arc  in  camp,  or  barracks,  or  ships  of 
war  subsisting  upon  the  work  of  the  rest  at  a  cost  of  $250 
per  man,  amounting  to  a  tax  of  $314,000,000  a  year. 
That  is  to  say,  one  man  in  every  fifteen  is  idle  so  far  as 
productive  industry  constitutes  occupation.  If  we  assume 
that  the  product  of  each  man's  work  in  productive  in- 
dustry in  these  States  would  possess  a  value  of  $300, 
a  larger  estimate  than  the  work  of  1,000,000  other  men 
is  devoted  to  the  support  of  these  armed  forces  and  what 
remains  of  the  product  of  the  rest  furnishes  thom  the 
meagre,  underfed  support,  which  characterizes  the  con- 
dition of  the  mass  of  the  people.  This  diversion  of 
product  from  constructive  to  destructive  purposes  is 
especially  noticeable  in  the  deficiency  of  nitrogen  in  the 
food  of  the  masses.  The  muscular  energy  of  the  army 
must  be  sustained  even  though  the  people  starve. 

This  waste  of  the  energy  of  2,236,000  men  out  of  19,- 
250,000  comes  to  a  fraction  under  twelve  per  cent,  of  the 
whole  force  and  renders  it  necessary  for  the  women  to 
perform  the  most  arduous  field  labor,  to  do  the  scavenger 
work  of  the  streets,  to  mix  the  mortar  for  the  building 
trades  and  in  many  other  ways  to  unsex  themselves. 
Bearing  in  mind  that  these  direct  and  indirect  taxes  upon 
work  upon  the  machine-using  States  of  continental 
Europe,  take  away  the  most  vital  element  from  produc- 
tion and  the  most  essential  element  from  an  insufficient 
supply  of  food  is  not  the  mystery  of  pauper  labor  dis- 
closed ?  Do  not  low  wages  and  inefficient  work  cease  to 
become  a  cause  for  dread  here  or  to  excite  any  fear  of 
competition  ? 

In  evidence  of  this  relative  inefficiency,  I  may  cite  the 
following  on  the  authority  of  Mr.  Chauncey  Smith  who 
was  the  counsel  of  the  McKay  Sewing  Machine  Company. 


THE    WASTE    OF  ARMIES.  1 8/ 

The  machines  made  by  this  company  throughout  the 
duration  of  its  patent  rights  and  of  its  existence  were 
made  in  the  same  way,  they  were  all  owned  and  kept  in 
repair  by  the  company,  the  revenue  was  derived  from  the 
sale  of  stamps,  one  of  which  was  to  be  attached  to  each 
pair  of  boots  and  shoes  made  upon  the  machine.  The 
revenue  derived  from  the  machines  thus  put  in  operation 
in  Europe  was  only  two  thirds  as  much  as  the  revenue 
derived  from  each  machine  on  the  average  in  the  United 
States.     Ex  iino  disce  omnes. 

From  this  example, the  relative  conditions  of  the  com- 
petition between  the  continental  States  and  the  English 
speaking  people  of  Great  Britain  and  the  United  States 
may  be  comprehended.  Upon  the  continent  of  Europe 
it  requires  longer  hours  and  a  greater  number  of  working 
men  or  women  to  do  the  work,  the  wages  in  all  arts  are 
lower  but  the  cost  of  labor  by  the  unit  of  the  product  is 
in  almost  all  cases  higher.  Except  for  the  variations  in 
the  relation  of  wages  to  cost  of  labor  which  have  been 
brought  about  by  restrictions  upon  trade  this  rule  would 
apply  to  all  cases. 

If  the  standing  army  of  the  United  States  bore  the  same 
ratio  to  the  number  of  men  of  arms-bearing  age  as  those  of 
Germany,  France,  and  the  Netherlands,  we  should  now 
have  850,000  men  in  active  service  and  at  our  higher  ratio 
of  product  it  would  take  the  work  of  at  least  650,000  men 
to  support  them,  making  1,500,000  men  in  all.  By  so 
much  as  this  burden  is  less  our  power  to  compete  with 
France  and  Germany  is  greater ;  we  deprive  ourselves  of 
a  part  of  this  advantage  by  taxing  crude  materials  that  we 
require  while  they  admit  them  free. 

But  the  burden  upon  Great  Britain  is  less  but  still 
severe,  especially  in  the  necessary  construction  and  sup- 
port of  her  navy.     In  proportion  as  her  burden   is  less  is 


1 88  TAXATION  AND   WORK. 

her  product  greater,  her  wages  higher  and  her  competition 
more  urgent  as  compared  to  continental  Europe.  Yet 
so  far  as  the  mere  equivalents  of  taxation  and  work  for 
the  support  of  the  national  government,  army  and  navy 
interest  on  debt  and  pensions  can  be  expressed  in  terms 
of  money,  her  assessment  in  1890  was  nine  dollars  and  a 
quarter  per  head  while  ours  was  only  five  dollars  and  a 
quarter.  We  must,  however,  add  to  our  own  tax  the  evil 
effect  of  a  bad  system  which  almost  if  not  quite  doubles 
the  sum.  But  even  then,  in  proportion  to  our  greater 
product  we  are  subject  to  a  lesser  burden  of  taxation  as 
compared  even  to  Great  Britain,  while  in  respect  to  the 
States  of  continental  Europe  our  burden  is  trivial. 

National  debts  work  a  different  distribution  of  the  pro- 
ducts of  labor  from  what  would  otherwise  be  made,  and 
therefore  may  create  great  differences  in  the  relative 
conditions  of  the  classes  who  own  the  bonds  as  compared 
to  those  who  are  taxed  for  the  interest. 

The  only  national  debt  which  is  being  diminished  in 
Europe  is  that  of  Great  Britain  ;  others  are  increasing. 
The  interest-bearing  debt  of  the  machine-using  nations 
that  I  have  listed.  Great  Britain,  France,  Germany,  Bel- 
gium and  Holland  is  about  $10,000,000,000,  say  ten 
billions  dollars,  mostly  incurred  for  purposes  of  war.  Our 
own  debt,  bearing  interest,  is  less  than  $600,000,000,  all 
of  which  will  soon  be  paid. 

When  the  English-speaking  people  of  Great  Britain, 
Canada  and  the  United  States  are  united  in  the  peaceful 
bonds  of  reciprocal  free  trade,  qualified  by  tariffs  for 
revenue  only,  the  continental  States  of  Europe  must 
disarm  or  starve. 

In  the  interval,  the  government  of  the  masses  for  the 
support  of  the  privileged  military  classes  go  on.  That 
which   is  seen   is  the  increase  of  debts,  the  increase  of 


THE    WASTE   OF  ARMIES.  1 89 

taxation,  the  growth  of  deficits,  the  spread  of  hunger  and 
the  enforcement  of  the  conscription  and  the  mihtary  drill 
with  greater  and  greater  severity.  What  is  not  seen  but 
heard  is  the  explosion  of  the  bombs  of  the  anarchist,  the 
conspiracies  and  assassinations  of  the  nihilist,  the  revolu-' 
tionary  excesses  of  the  communist  and  the  rapid  spread  of 
socialism  when,  even  for  a  few  weeks,  the  pressure  of  the 
government  is  removed. 

These  are  the  complement  of  the  policy  of  blood  and 
iron  and  of  military  rule. 

It  must  be  left  to  others  to  trace  out  the  connection  of 
cause  and  effect.  All  that  I  can  do  is  merely  to  suggest 
what  may  be  hidden  behind  the  figures  of  Taxation  and 
Work  except  to  those  who  can  apply  the  imagination  to 
wrest  from  them  their  true  meaning. 

In  support  of  the  theory  that  the  rate  of  wages  depends 
upon  the  supply  of  the  nitrogenous  element  of  food,  I 
may  give  some  facts  which  have  been  developed  by  an 
investigation  of  the  comparative  nutrition  of  countries 
and  States  upon  which  a  beginning  only  has  been  made. 

A  thirty  days'  ration  that  will  support  life  without 
much  power  of  work  consists  of  fifty-three  pounds  of 
grain  and  vegetables  with  four  pounds  of  fat — either 
butter,  pork  or  suet.  In  Boston  this  quantity  can  be 
bought  for  $2.10,  or  at  the  rate  of  seven  cents  a  day; 
flour  purchased  by  the  sack  or  barrel,  the  rest  in  small 
parcels  at  retail.  Twenty-five  pounds  of  meat  added 
carries  this  life-ration  to  the  standard  of  the  working 
ration  of  a  German  soldier  in  active  service.  In  Boston 
this  quantity  can  be  bought  at  retail,  of  the  coarser  or 
tougher  portions  of  meat  readily  converted  into  nutritious, 
appetizing  and  tender  food  by  right  methods  of  cooking 
for  $1.80,  or  at  the  rate  of  six  cents  per  day,  making  the 
cost  of  adequate  nutrition  thirteen  cents  a  day  or  ninety-one 


IQO  TAXA  TION  AND   WORK. 

cents  a  week.  Coffee  or  tea  may  be  added  within  the  com- 
pass of  $i.oo  a  week.  Of  course  there  are  very  few  persons 
who  can  give  the  time  or  possess  the  gumption  to  secure 
a  good  subsistence  at  this  low  cost,  but  it  is  wholly 
feasible.  In  this  land  of  abundance  the  food  bill  of  an 
adult  working-man  is  apt  to  be  double  the  sum  named 
and  a  large  portion  of  what  is  spent  for  food  material  is 
wasted  in  bad  cooking.  That  subject  does  not  come 
within  the  scope  of  this  treatise.  Suffice  it  that  one  may 
obtain  the  full  standard  of  nutrition  of  a  German  soldier 
and  vary  the  bill  of  fare  every  day  in  the  week  at  a  cost 
of  thirteen  cents  a  day  in  New  England. 

In  Michigan,  Iowa,  and  Nebraska  the  cost  of  this  full 
supply  of  bread,  meat,  and  vegetables  may  be  reduced,  at 
the  customary  retail  prices,  to  eleven  and  even  to  ten 
cents  a  day.  In  London  and  in  Paris  the  cost  is  sixteen 
to  seventeen  cents.  In  Berlin,  Nuremberg,  Munich,  and 
other  cities  of  Germany  the  cost  of  the  same  quantity  of 
bread,  vegetables,  and  meat  is  twenty-one  to  twenty-three 
cents  per  cent.  The  wages  of  the  workman  permit  no 
such  expenditure  ;  he  can  barely  secure  a  supply  of  food 
that  will  support  life,  he  must  forego  the  meat,  and  make 
up  as  well  as  he  may  for  the  deficiency  of  nitrogen  by  the 
consumption  of  peas,  beans,  lentils  and  other  legumes, 
and  of  cheese.  But  when  he  has  spent  sixty  to  seventy 
percent,  of  his  meagre  earnings  for  the  food  of  himself 
and  those  who  depend  upon  him  he  is  still  an  underfed 
and  ill-nourished  man.  For  want  of  means  he  cannot  buy 
the  food  which  is  necessary  to  efficient  work,  for  lack  of 
efficiency  in  the  work  he  cannot  earn  more  than  enough 
to  support  life,  and  barely  that.  Meantime  the  army  is 
supported  on  rations  which  have  been  most  carefully  com- 
puted so  as  to  secure  the  maximum  of  energy. 

No  wonder  that  the  government  of  Germany  is  attempt- 


THE    WASTE    OF  ARMIES.  I9I 

ing  to  teach  the  working-people  what  food  to  buy  and 
how  to  cook  it,  lest  hunger  should  convert  socialism  into 
anarchy,  and  perhaps  induce  the  conscript  soldier  who  is 
now  subject  to  a  drill  which  has  been  denounced  as  cruel 
in  its  severity,  to  turn  his  rifle  upon  the  privileged  mili- 
tary class,  by  whom  the  policy  of  blood  and  iron  has 
been  enforced. 

The  thrift  of  the  French  and  their  skill  in  cooking 
enables  them  to  resist  the  lesser  measure  of  want  that 
afflicts  France ;  but  her  population  is  stationary,  and 
Paris  is  a  volcano  ready  to  burst  into  a  destructive  erup- 
tion at  any  moment.  Italy  pays  for  armed  liberty  by 
semi-starvation,  and,  like  Germany,  is  losing  the  better 
part  of  her  working-people  by  emigration,  while  the  less 
capable  and  ill-nourished  remain. 

The  benefits  of  modern  science  and  invention,  and  the 
increased  product  derived  therefrom,  are  grasped  by  the 
governments  of  continental  Europe  and  expended  in  mili- 
tary oppression ;  yet  national  debts  and  deficits  increase, 
while  the  disciples  of  Lasalle  preach  the  so-called  "  iron 
law  of  wages,"  which  has  no  application  in  a  free  country. 
It  is  based  upon  the  conception  that  the  lower  the  cost  to 
which  a  bare  subsistence  may  be  brought,  the  lower  will 
the  rate  of  wages  be  forced. 

In  the  French  Revolution  the  soldiers  fraternized  with 
the  people.  In  the  Revolution  of  1848  they  began  to  do 
so,  but  were  checked.  What  will  be  their  decision  in  1893 
to  1898  if  another  bad  harvest  occurs? 

It  matters  not  to  this  country,  in  the  consideration  of 
the  subject  of  foreign  competition,  whether  the  conditions 
of  continental  Europe  remain  as  they  now  are  or  culminate 
in  revolutions  ;  the  only  aspect  of  the  case  to  us  is  how  to 
enable  these  underfed  people  to  buy  our  food  by  enabling 
them  to  send  us  their  products  which  are  their  only  means 


192  TAX  A  TIOM  AND    WORK. 

of  payment.  Otherwise  it  will  happen,  as  Chancellor 
Caprivi  has  put  it,  "  Germany  must  export  goods  or 
men,"  and  so  must  other  European  countries.  Either  the 
product  or  the  laborer  will  come  to  this  country  :  which 
can  we  assimilate  most  readily?  Would  it  not  be  better 
to  make  it  for  the  interest  of  the  French  Canadians,  the 
Italians,  the  Bohemians,  and  the  Slavs  to  remain  at  home 
by  opening  the  way  for  them  to  buy  our  excess  of  our 
grain,  cotton,  iron,  oil,  and  goods  in  exchange  for  what- 
ever they  can  supply  as  the  means  of  payment,  rather 
than  to  promote  their  coming  to  this  country  faster  than 
we  can  find  suitable  work  for  them  to  do  ? 

As  Daniel  Webster  once  tersely  put  the  case,  "  Can  we 
afford  to  do  the  kind  of  work  in  this  country  which 
foreign  paupers  can  do  for  us,"  without  coming  here  and 
placing  any  greater  difficulty  upon  us  in  the  conduct  of 
our  government  ? 


CHAPTER  XXV. 

Senator  Morrill's  Report  on  Canada  Received. 
Food  and  Wages. 

After  Chapter  XIX.  of  this  series  had  been  completed, 
a  report  made  to  the  Senate  of  the  United  States  by 
Senator  Morrill  and  Senator  McPherson,  upon  the  effect 
of  the  McKinley  tariff  upon  our  commerce  with  Canada, 
was  published. 

The  report  is  written  by  Senator  Morrill ;  his  colleague 
concurs  in  the  statement  of  facts  given  therein,  but  does 
not  concur  in  the  conclusions  that  are  drawn  from  them 
by  Senator  Morrill.  One  cannot  greatly  wonder  at  his 
reserve — he  may  soon  perhaps  give  his  own  conclusions. 
No  document  has  yet  been  published  which  gives  such 
conclusive  testimony  in  regard  to  the  grave  injury  done 
not  only  to  the  people  of  Canada,  but  also  of  the  United 
States,  by  the  tariffs  of  1883  and  1890.  It  was  hardly  to 
have  been  expected  that  Senator  Morrill  would  read  the 
true  lesson  on  which  he  himself  has  become  a  most  satis- 
factory witness.  Senator  Morrill  labors  under  the  delusion 
which  is  now  shared  by  only  a  very  small  number  of  the 
older  members  of  the  Senate  and  of  the  House,  that  one 
of  the  effects  of  a  duty  imposed  in  this  country  upon  a 
given  import  is  to  depress  the  price  of  that  article  in  the 
country  in  which  it  is  produced,  and  that  by  such  reduc- 
tion the  burden  of  our  tax  is  put  upon  that  country. 

193 


194  TAXATION  AND    WORK. 

It  is  difficult  to  deal  seriously  with  this  misconception. 
If  it  were  true,  it  would  be  manifestly  for  our  interest  to 
transfer  all  our  taxes  to  our  neighbors ;  it  would  also  be 
manifestly  as  much  for  the  interest  of  our  neighbors  to 
put  all  their  taxes  upon  us. 

Again,  if  we  could  thus  shift  the  burden  of  our  taxes, 
on  what  ground  could  the  remission  of  our  tariff  taxes 
upon  tea,  coffee,  and  sugar  be  justified  ?  Why  should 
we  not  put  eighty  to  one  hundred  million  dollars'  worth 
of  the  cost  of  our  government  upon  the  producers  of  tea, 
coffee,  and  sugar,  which  at  the  instance  of  a  Republican 
administration,  with  the  support  of  Senator  Morrill,  have 
been  made  duty  free? 

There  are,  however,  some  conditions  under  which  the 
effect  of  a  duty  upon  imports  into  this  country  is  to  de- 
press the  price  of  a  dutiable  article  in  the  producing 
country ;  this  is  one  of  the  most  evil  effects  of  a  high 
tariff  system  that  can  be  conceived.  Our  duties  upon 
the  products  of  Canada  have  unquestionably  had  that 
effect,  because  a  very  large  portion  of  the  products  of 
Canada  are  of  such  a  nature  that  if  they  cannot  be  ex- 
ported to  the  United  States  they  cannot  be  sold  for  export 
to  any  other  point. 

We  will  now  take  up  the  testimony  of  Senator  Morrill. 
After  reporting  upon  the  lessening  population  of  the 
border  towns  of  Canada,  he  says  : 

"  F'rom  the  testimony  taken,  it  was  clear  that  the  United  States  offered 
better  markets  and  higher  prices  for  anything  and  everything  that  Canadian 
farmers  had  to  sell,  than  could  be  obtained  in  the  Canadian  Dominion,  and 
the  price  and  value  there  of  horses,  cattle  or  sheep,  hay,  peas,  beans,  butter, 
eggs,  and  poultry,  was  invariably  as  much  below  the  selling  price  in  the 
United  States  as  the  amount  of  duties  imposed  and  the  cost  of  transporta- 
tion. ...  So  far  as  tlie  Canadian  Dominion  is  concerned,  there  is 
no  doubt  that  they  bear  the  entire  burden  of  duties  imposed  upon  their 
exports  into  the  United  States." 


SENATOR  MORRILL'S  REPORT  ON  CANADA.        I95 

Elsewhere  Senator  Morrill  proves  that  the  duties  on  pine 
boards  had  a  similar  influence  on  Canadian  prices.  Here  we 
have  a  complete  admission  that  when  trade  is  obstructed 
by  high  duties  imposed  by  a  country  of  very  great  pur- 
chasing and  consuming  power,  like  the  United  States,  the 
prices  of  the  taxed  articles  must  be  reduced  in  the  produ- 
cing country.  What  is  the  effect  of  that  reduction?  Under 
a  treaty  of  reciprocity  with  Canada  the  Canadians  bought 
from  us  goods,  wares,  and  products  of  various  kinds,  to 
the  full  extent  of  the  full  value  of  their  sales  to  us  before 
the  reduction  in  price.  By  reducing  the  receipts  for 
their  products  in  the  measure  of  our  taxes  upon  imports, 
we  have  therefore  cut  down  the  purchasing  power  of  the 
Canadians ;  by  our  own  act  we  have  reduced  their  ca- 
pacity to  buy  our  products  in  that  measure  or  even  in 
greater  measure.     Who  loses  most  ? 

Why  in  greater  measure?  Because  the  margin  of 
profits  upon  Canadian  products  was  probably  in  many 
cases  so  small  as  to  be  within  the  line  of  taxation.  By 
reducing  the  prices  of  their  products  to  the  full  measure 
of  our  taxes  upon  them  we  have  destroyed  their  profit, 
and  we  have  therefore  forced  them  in  some  places  to  give 
up  the  entire  product.  This  is  proved  by  the  increase  of 
immigration  from  Canada  to  the  United  States,  which 
will  be  subsequently  treated.  Having  deprived  Canadians 
of  their  work  at  home,  they  come  here ;  Senator  Morrill 
is  a  good  witness  to  this. 

Let  him,  however,  carry  his  investigations  further  and 
deal  with  the  same  principle  applied  in  other  countries. 
Our  tax  upon  pig-iron  has  depressed  the  price  of  iron  in 
Great  Britain  and  Germany ;  our  tax  upon  wool  has  de- 
pressed the  price  of  wool  in  Australia,  South  America, 
Antwerp,  and  London,  precisely  as  our  tax  upon  beans, 
potatoes,  butter,  and  eggs  has  depressed  the  price  of  these 


196  TAXA  TION  AND    WORK. 

articles  in  Canada.  A  country  of  huge  purchasing  power 
like  the  United  States  cannot  withdraw  in  part  or  be 
wholly  excluded  from  any  market  anywhere,  without  in 
some  measure  depressing  the  price  of  the  article  which 
we  are  forbidden  to  purchase  in  that  market.  What  then 
ensues?  The  consumers  of  the  lessening  product  of 
Canada  have  been  enabled  to  purchase  food  supplies  for 
the  operatives  in  their  factories  and  in  their  workshops  at 
a  lower  cost,  and  thus  have  perhaps  been  enabled  to  sup- 
ply the  Canadian  markets  with  goods  that  might  other- 
wise have  been  purchased  in  this  country.  In  the  same 
manner  our  taxes  upon  pig-iron  and  wool  have  depressed 
the  price  of  these  most  important  crude  materials  in 
Europe.  Senator  Morrill  perceives  the  effect  in  Canada, 
and  he  may  perhaps  say  that  we  have  thus  put  our  tariff 
tax  upon  iron  and  wool  upon  the  producers ;  but  when 
one  looks  a  step  beyond  that  first  plausible  but  somewhat 
shallow  conception,  it  at  once  appears  that  we  have 
thereby  given  the  consumers  of  pig-iron  and  wool  in 
Europe  a  huge  advantage  over  our  own  factories  and 
workshops. 

The  Senator  next  very  naively  relates  the  evil  effect 
upon  ourselves  of  our  duties  upon  Canadian  products  : 
"  Formerly,"  he  says,  "  in  the  absence  of  all  duties  the 
Canadians  sold  their  white  winter  wheat  in  our  market,  and 
took  in  return  some  of  the  cheaper  spring  wheat,  bearing 
a  less  price.  At  that  time  Oswego,  N.  Y.,  milled  about 
ten  thousand  barrels  of  flour  a  day,  and  now  mills  only 
about  twenty-six  hundred.  The  abrogation  of  the  Ca- 
nadian reciprocity  treaty  rendered  Oswego  elevators  of 
comparatively  little  use." 

What  more  damning  evidence  of  injury  to  ourselves 
could  be  given  than  this?  Senator  Morrill  goes  on  with 
his  testimony  :  "  When  this  traffic  in  flour  was  broken  up, 


SENATOR  MORRILL'S  REPORT  ON  CANADA,        1 97 

the  Oswego  elevators  were  devoted  in  part  to  storing 
Canadian  barley,"  which  is  of  better  quality  than  the  bar- 
ley grown  farther  South,  for  malting  and  converting  into 
beer.  But  again.  Senator  Morrill  testifies  in  a  perfectly 
straightforward  manner  that  "although  a  higher  rate  of  duty 
was  placed  on  malt  through  the  act  of  1890  than  in  1883, 
yet  the  higher  rate  on  barley  tended  to  exclude  Canadian 
barley  also.  .  .  .  Notwithstanding  Oswego  has  less 
milling  and  lumber  business  than  in  former  years,  and 
since  1890  having  its  malting  business  threatened  or 
wholly  suspended,  yet  its  citizens  are  by  no  means  want- 
ing in  courage,  and  have  started  new  and  prosperous  enter- 
prises," among  which  Senator  Morrill  names  '^shoddy-cloth 
millsy  The  people  of  Oswego  must  be  very  grateful  to 
Senator  Morrill  and  Representative  William  McKinley, 
Jr.  These  gentlemen  and  their  coadjutors  have  decided 
that  the  people  of  Oswego  were  incapable  of  choosing  the 
right  investment  for  their  capital  or  the  right  employment 
for  their  workmen,  and  having  destroyed  their  capital  and 
stopped  the  work  of  their  laborers  in  milling  wheat  and 
malting  barley,  they  now  heartily  commend  their  courage 
and  enterprise  in  attempting  to  convert  their  old  clothes 
into  new  garments  by  establishing  "'prosperous  shoddy- 
cloth  milhy  Since  this  was  written,  the  elevators,  which 
had  been  in  part  destroyed  by  our  tariff,  have  been 
wholly  destroyed  by  fire.  Does  the  Senator  commend 
the  fire  ? 

We  will  now  cite  Senator  Morrill's  testimony  upon  the 
labor  question.  The  declared  purpose  of  the  policy 
advocated  by  himself  and  his  coadjutors  is  to  maintain  the 
rates  of  American  wages  while  he  deprives  the  laborer  of 
the  hard  wheat,  the  better  barley,  the  potatoes,  the  fish, 
the  eggs,  and  the  other  foreign  luxuries  with  which  Canada 
might  flood  us.     In  order  to  maintain  the  rate  of  wages 


198  TAXA  TION  AND    WORK. 

of  the  American  fanner,  lumberman,  mechanic,  and  fac- 
tory operative  he  has  taken  the  most  effective  measures 
to  promote  immigration  from  Canada. 

It  will  be  observed  that  he  bears  witness  to  the  fact 
that  by  taxing  Canadian  products  we  have  depressed  the 
prices,  and  that  by  so  doing  we  have  depressed  the  rates 
of  Canadian  wages.  Manifestly  this  must  be  the  result, 
because  all  wages  are  derived  from  the  sale  of  the  products 
of  labor.  To  the  extent  that  we  have  depressed  the 
prices  of  Canadian  products  we  have  destroyed  the  power 
of  Canadian  employers  to  hire  Canadian  labor.  Hence  it 
follows,  as  Senator  Morrill  testifies,  that  "  wages  are  much 
less  in  the  Canadian  Dominion,  ranging  in  amount  from 
fifteen  to  thirty-three  per  cent.,  and  in  some  cases  even  to 
fifty  per  cent.  .  .  .  The  average  difference  of  all  kinds 
of  labor  may  be  reckoned  at  rather  more  than  less  than 
twenty-five  per  cent.  It  was  remarked  that  the  wages  of 
the  laboring  man  in  Nova  Scotia  and  New  Brunswick 
were  twenty-five  per  cent,  less  than  in  Maine." 

Having  thus  converted  the  flour  mills  of  Oswego  into 
shoddy-cloth  mills,  having  deprived  the  people  of  Canada 
of  profitable  work  in  supplying  some  of  our  wants,  having 
reduced  the  rates  of  Canadian  wages  below  the  level  of  a 
comfortable  living,  what  comes  next?  Again  Senator 
Morrill,  with  unconscious  integrity,  bears  witness.  "  Com- 
mencing in  April  it  was  stated  that  there  was  a  daily  aver- 
age of  about  eight  hundred  Canadian  and  foreign  immi- 
grants who  passed  through  Newport,  Vermont,  on  their 
way  to  New  Hampshire,  Massachusetts,  and  elsewhere  to 
obtain  employment,  many  of  them  brickmakers.  In  the 
fall  of  the  year  they  mostly  return.  Another  class  comes 
in  the  fall  and  returns  in  the  spring,  but  all  come  in  con- 
sequence of  higher  wages.  Some  are  destined  to  go  as 
far  as  Savannah,  Ga.,  and  as  the  same  parties  appear,  year 


SENATOR  MORRILL'S  REPORT  ON  CANADA.        199 

after  year,  it  may  be  presumed  that  employment  has  been 
promised."  The  evidence  taken  in  Detroit  was  to  this 
effect :  "  Many  Canadian  laborers  come  here,  of  course 
because  of  better  wages,  and  because  they  can  always  find 
work  here,  .  .  .  Some  of  the  workingmen,  although 
citizens  of  Detroit,  rent  houses  in  Windsor  for  the  reason 
that  rentals  are  much  less  there."  This  testimony  in  re- 
gard to  what  has  been  called  "  the  pauper  labor  "  of  Can- 
ada coming  in  competition  with  our  workingmen  in  New 
England  and  other  sections  may  be  commended  to  the 
especial  attention  of  those  who  wish  to  regulate  immigra- 
tion. May  not  immigration  from  Canada  be  regulated 
by  making  it  more  profitable  for  Canadian  workmen  to 
stay  at  home  and  supply  us  from  there  with  their  products 
in  exchange  for  our  manufactures, — rather  than  by  inducing 
them  to  come  here,  year  by  year,  to  work  for  a  season, 
sending  their  wages  back  to  Canada  for  the  support  of 
their  families,  while  they  themselves  compete  each  season 
for  a  share  of  the  work  that  is  to  be  done  here  ? 

I  may  also  venture  to  commend  this  statement  to  Sena- 
tor Dawes,  whose  definition  of  the  principle  of  Protection 
I  will  now  give  :  "  It  is  the  principle,  as  I  understand  it, 
which  leads  one  man  to  erect  a  fence  between  his  pasture 
and  that  of  his  neighbor  that  he  may  the  better  enjoy 
his  own." 

It  would  perhaps  be  well  for  Senator  Dawes  to  repair 
the  fence  between  Massachusetts  and  Canada  which  keeps 
out  wool  but  lets  in  the  shepherd, — keeps  out  potatoes 
but  lets  in  the  farmhand, — keeps  out  lumber  but  lets  in 
the  carpenter,— that  keeps  out  the  bricks  but  lets  in  the 
brickmaker.  Perhaps  the  workingmen  of  Massachusetts 
will  build  that  fence  in  another  way.  They  will  take  off 
all  the  top  bars  and  some  of  the  lower  ones  ;  they  will 
make  some  gates  in  the  fence  so  as  to  facilitate  commerce 


200  TAXATION  AND    WORlC. 

with  Canada,  and  so  as  to  induce  the  Canadians  to  stay 
at  home  where  they  may  earn  good  wages  by  supplying 
us  with  fish,  potatoes,  eggs,  barley,  hay,  oats,  lumber,  and 
other  Canadian  products,  of  which  they  will  send  us  an 
ample  abundance  in  exchange  for  the  manufactured  goods 
and  wares  of  our  own  States. 

So  much  for  this  admirable  report  of  Senator  Morrill. 
Since  this  series  of  treatises  was  undertaken  we  have  also 
been  furnished  with  preliminary  reports  giving  the  data 
that  have  been  secured  by  Col.  Carroll  D.  Wright,  in 
respect  to  wages  and  the  cost  of  subsistence  in  foreign 
countries.  The  facts  which  have  been  given  in  these 
reports  wholly  sustain  me  in  my  own  deductions  made 
from  my  limited  investigations,  and  also  sustain  some  of 
my  a  priori  and  hypothetical  conclusions  in  the  most  con- 
vincing manner. 

Time  and  space  will  not  permit  a  complete  analysis  of 
this  report.  For  present  purposes  it  may  only  be  re- 
ferred to  in  order  to  sustain  certain  propositions  pre- 
viously given  in  regard  to  the  relative  earnings  of  the 
people  of  different  countries,  and  also  in  support  of  my 
theory  of  the  ratio  of  earnings  to  the  food  supply.  I 
avail  myself  in  part  of  the  analysis  of  this  report  made  by 
the  Daily  Commercial  Bulletin  of  New  York.  From  this 
it  would  appear  that  information  has  been  obtained  by 
Commissioner  Wright  from  5,284  families,  representing 
27,577  persons,  an  average  of  5.20  per  family.  The  nor- 
mal family  under  the  instructions  given  by  the  Com- 
missioner was  to  be  selected  under  the  following 
provisions : 

1.  Both  husband  and  wife. 

2.  An  expenditure  for  each  of  the  following  items : 
rent,  fuel,  lighting,  clothing,  food,  and  other  purposes. 

3.  Must  rent  the  house  in  which  it  lives. 


SENATOR  MORRILL'S  REPORT  ON  CANADA.        20I 

4.  Must  not  have  more  than  five  children,  none  over 
fourteen  years  of  age. 

5.  Must  not  have  any  boarders  or  tenants. 

One  can  only  guess  at  what  the  normal  family  of  this 
country  really  is,  or  what  the  normal  income  of  the 
average  working  family  of  this  country  may  be.  From 
my  own  investigations  I  am  very  certain  that  it  would 
substantially  cover  five  persons,  father,  mother,  and  three 
children,  and  that  the  normal  or  average  income  of  work- 
ing people  in  the  strictest  use  of  that  term  would  be 
found  on  the  line  of  $500  a  year  to  each  family  ;  there 
may  be  a  substantially  equal  number  spending  between 
$400  and  $500,  and  between  $500  and  $600.  There  would 
also  be  a  much  greater  number  between  $600  and  $1,200 
than  there  would  be  found  below  the  $400  limit. 

The  normal  family  among  all  classes  is  substantially 
five,  but  relatively  few  families  are  supported  by  one 
member.  The  group  of  which  one  is  at  work  for  gain 
consists  of  three  persons,  one  of  whom  supports  the 
other  two. 

When  the  full  report  of  Col.  Wright's  investigations  is 
printed,  together  with  the  data  now  being  gathered  for 
the  Senate  Finance  Committee,  we  shall  probably  be 
able  to  determine  the  relative  income  and  expenditure  of 
many  classes  of  working  men  and  women  in  this  and  in 
other  countries  more  surely  than  we  now  can. 

Assuming  that  the  analysis  given  in  the  Daily  Covi- 
mercial  Bulletin  is  accurately  computed,  we  find  that, 
according  to  Commissioner  Wright's  figures,  in  the  nor- 
mal family  of  5.20  persons,  as  given  by  him,  of  which  the 
working  members  are  occupied  in  the  cotton  industry,  in 
the  woollen  and  worsted  industr)-,  in  the  production  of 
pig-iron,  and  in  the  conversion  of  pig-iron  into  bar-iron 
(the  latter  being  a  class  of  high-priced  workmen), — 


202  TAXATION'  AND    WORK. 

The  average  income  per  fajiiily  in  the  United  States  comes  to $674 

In  corresponding;  families  in  (Ireat  IJritain  the  income  is 510 

In  France  (pig-iron  not  being  given,  on  cotton,  woollen,  and  bar-iron 

only),  average 418 

In  Germany,  on  cotton,  woollen,  and  bar-iron,  average 287 

The  advantage  in  this  country  is  somewhat  greater  than 
my  proportionate  estimates. 

The  earnings  of  these  specific  groups  in  this  country  are  : 

135  per  cent,  above  German  rates 
61       "  "        the  French 

32       "  "       the  English. 

The  relative  proportion  of  expenditure  may  vary  in 
other  occupations  ;  our  present  purpose  is  to  determine 
the  relative  purchasing  power  of  that  proportion  of  the 
income  which  is  devoted  to  the  purchasing  of  food  in 
this  country,  Great  Britain,  France,  and  Germany  by 
working  people  in  these  specific  classes. 

The  relative  incomes  of  the  three  classes  and  the  per 
cent,  of  money  spent  for  food  in  the  classes  previously 
given  are  as  follows  : 

United  States income  $674  ;  expended  for  food  44  %  or  $296 

Great  Britain "          512;         "  "  "     50       "     256 

France "         418;         "  "  "     48       "     200 

Germany "          287;         "  "  "     50       "     143 

Recalling  the  fact  that  a  ration  equal  to  that  of  a 
German  soldier  in  active  service  can  now  be  purchased  in 
Boston  at  twelve  and  one-half  to  thirteen  cents  per  day, — 
in  Great  Britain  at  sixteen, — in  France  at  seventeen, — in 
Germany  and  Belgium  at  twenty  to  twenty-three, — we 
then  have  the  purchasing  power  of  the  income  devoted  to 
nutrition  in  its  relation  to  food  supplies. 

The  purchasing  power  of  $296,  spent  in  New  England 
in  daily  rations  at  an  average  of  thirteen  cents,  yields  3,277 
rations  ;  $256,  spent  in  Great  Britain  at  sixteen  cents,  yields 
1,601  rations;  $200,  spent  in  France,  at  seventeen  cents. 


SENATOR  MORRILVS  REPORT  ON  CANADA.        203 

yields  1,176  rations;  $143,  spent  in  Germany  at  twenty 
cents,  yields  702  rations  ;  all  for  one  year. 

We  may  rightly  assume  that  the  normal  family,  esti- 
mated by  Commissioner  Wright  to  contain  5.20  persons, 
possesses  the  consuming  power  of  four  adults.  Divide 
the  rations  per  family  by  four  and  we  then  find  that  the 
average  sum  expended  per  adult  in  the  United  States  for 
365  days  will  give  him  569  full  rations.  He  spends  his 
money  for  a  higher  price  and  quality.  The  average  ex- 
penditure per  capita  in  Great  Britain  yields  400  full 
rations  for  365  days,  or  a  good  subsistence  with  a  margin 
over,  which  corresponds  to  the  condition  of  the  well-fed 
prosperous  English  artisan  or  mechanic.  In  France  the 
per  capita  expenditure  yields  only  294  full  rations  for  365 
days,  which  is  consistent  with  the  lack  of  meat  and  the 
relative  lack  of  energy  among  the  French.  The  purchas- 
ing power  in  Germany  of  that  part  of  the  meagre  in- 
come devoted  to  food  is  only  176  rations  for  365  days; 
all  facts,  observations,  and  figures  indicate  the  underfed 
condition  of  the  great  body  of  German  workmen. 

It  may  be  urged  that  the  data  are  not  yet  sufficient  for 
such  a  conclusion.  Let  it  be  remarked,  however,  that  so 
far  as  these  data  prove  anything  they  sustain  the  a 
priori  theory  derived  by  myself  from  broad  and  general 
averages,  and  they  are  sustained  by  the  reports  of  special 
investigations.  They  correspond  also  to  the  observations 
of  acute  scientific  observers  who  have  witnessed  in  Ger- 
many the  exact  conditions  named.  These  results  are  in 
themselves  deductions  from  the  widest,  closest,  and  most 
scientific  investigation  of  figures  and  facts  combined  that 
has  ever  been  made  in  this  or  any  other  country. 

The  conditions  in  Italy  are  worse  and  the  increasing 
deficits  are  now  forcing  the  government  to  diminish  arma- 
ments under  penalty  of  starvation. 


204 


TAXA  TION"  AND    WORK. 


Reference  has  been  made  to  proportionate  incomes. 
From  an  advance  sheet  kindly  furnished  me  by  Commis- 
sioner Wright  from  the  Seventh  Report  of  the  Department 
of  Labor  now  in  press,  I  am  permitted  to  give  the  propor- 
tionate incomes  of  2,562  families,  being  only  a  part  of 
those  previously  considered.     In  the  United  States, 

EARNING  FAMILIES 

Under  $200 24 

$200  and  under  $300 105 


$300 
$400 
$500 
$600 
$700 
$800 
$900 
^1,000 

^I.IOO 


$400. 

$500. 

$600. 

1700. 

$800. 

$900 

M.ooo 95 

^1,100 62 

)i,2oo 24 


•395 
.659 

•509 
.300 
.192 
.III 


$1 ,  200  and  over 86 

Total 2,562 

The  proportionate  expenditures  of  these  families  are : 


For  rent 
fuel 

lighting 
clothing     . 
food 
other  purposes 

15.05     per 

5.01       " 

.90       " 

15.31       " 
41.05       " 
22.68 

Total      . 

100.00 

I  have  given  these  latter  details  as  matters  of  general 
interest,  and  as  examples  of  the  studies  now  in  progress 
from  which  we  may  soon  be  in  possession  of  such  ade- 
quate knowledge  of  the  relative  conditions  of  labor  in  this 
and  other  countries  as  will  remove  many  errors  which  now 
obscure  the  discussion  of  the  tariff. 


CHAPTER  XXVI. 

In  the  Matter  of  Silver,  Bi-Metallism,  and  Free 

Coinage. 

It  would  not  be  suitable  to  leave  the  subject  of  Taxa- 
tion and  Work  after  having  treated  the  tariff  system  only. 
The  very  worst  and  most  destructive  form  of  tax  that  can 
be  imposed  on  any  community  is  to  tamper  with  the 
currency  and  to  impair  the  standard  of  value.  Compared 
to  this  method  of  taxing  the  many  for  the  benefit  of  the 
few,  the  tariff  sinks  into  relative  insignificance. 

It  will  not  be  possible  to  extend  these  treatises  much 
further.  Hence,  the  only  present  treatment  which  the 
writer  can  be  permitted  to  adopt  will  be  to  put  down  a 
series  of  propositions  and  interrogatories,  to  the  end  that 
each  person  who  gives  thought  to  the  subject  may  des- 
ignate all  points  of  agreement  by  numbers.  These  points 
being  eliminated,  a  large  part  of  the  apparent  complexity 
will  be  removed,  and  it  may  be  possible  thereafter  to 
come  to  an  agreement  on  the  points  of  difference  which 
will  be  left  after  cancelling  the  points  of  agreement. 

In  framing  these  propositions  and  queries  I  have  endeav- 
ored to  develop  the  logic  of  the  case  upon  the  basis  of 
admitted  facts,  bearing  in  mind  that  all  statutes  which 
are  not  consistent  with  the  nature  of  things  must  either 
be  repealed  or  become  inoperative,  else  the  attempt  to 
enforce  them  will  only  make  disorder. 

205 


206  TAXATION  AND    WORK. 

1.  Gold  and  silver  have  become  what  are  known  as 
money  metals,  through  a  gradual  process  of  natural  selec- 
tion subsequently  established  under  forms  of  law. 

2.  Coinage  is  a  process  of  manufacture  ;  that  is  to  say, 
a  process  of  converting  a  definite  weight  of  the  pure  metal 
of  which  the  coin  mainly  consists,  with  a  definite  propor- 
tion of  alloy  into  a  disk,  upon  which  a  government  stamp 
is  put  in  order  to  certify  its  kind,  its  weight,  and  its  fine- 
ness— in  other  words,  to  certify  to  the  quality  of  the  coin. 
That  definition  exhausts  the  word  coinage. 

3.  Coinage  has  been  made  a  government  monopoly  in 
order  to  assure  just  weight  and  quality. 

4.  The  names  of  nearly  all  coins  can  be  traced  to  defi- 
nitions of  weight.  It  is  probable  that  all  coins  were  once 
named  in  that  way  so  that  the  name  might  correspond 
to  the  weight  of  metal  in  them.  When  subdivided, 
the  smaller  coins  represent  aliquot  parts  of  a  given 
weight. 

5.  The  valuation,  estimation,  or  conception  of  value 
of  each  coin  is  first  derived  from  the  estimation  in  which 
a  given  weight  of  metal  is  held  in  ratio  to  other  things 
that  may  be  exchanged  for  it.  The  estimation  or  value 
of  representative  or  token  money  rests  wholly  upon  its 
being  redeemable  or  convertible  into  coin  of  full  weight. 

6.  When  goods  are  sold  for  coined  money  or  its  equiv- 
alent, coin  is  bought ;  vice  versa,  when  coin  is  bought, 
goods  or  services  are  sold.  It  is  not  necessary  that  actual 
coin  should  pass ;  instruments  of  credit  serve  to  give  title 
to  coin. 

7.  A  contract  to  pay  one  or  many  dollars  is  therefore 
a  contract  to  deliver  certain  things  containing  a  certain 
weight  of  metal. 

8.  A  contract  to  deliver  a  certain  number  of  gold  dol- 
lars is,  therefore,  a  contract  to  deliver  the  just  weight  of 


SILVER,   BIMETALLISM,   AND  FREE   COINAGE.      20/ 

gold  in  the  gold  dollar.  The  alloy  adds  nothing  to  the 
value.  The  process  of  coining  merely  certifies  the  coin 
and  gives  stability  to  its  valuation. 

9.  A  contract  for  the  delivery  of  one  metal  cannot  be 
satisfied  by  the  delivery  of  another  metal  in  any  true  and 
just  sense  at  any  fixed  ratio  or  proportion,  because  the 
ratio  or  value  of  each,  as  compared  to  the  other,  changes. 

10.  If  it  were  enacted  that  dollars  were  to  be  made 
only  of  gold,  and  that  the  silver  coin  which  is  now  named 
a  dollar  were  legally  named  thaler  (from  which  word  the 
word  dollar  is  supposed  to  be  derived),  then  a  contract  in 
dollars  could  only  be  satisfied  by  the  delivery  of  gold 
dollars  ;  a  contract  in  thalcrs  could  only  be  satisfied  by  a 
delivery  of  thalcrs  in  silver. 

11.  Scrip,  that  is  to  say,  tokens  made  of  paper  con- 
vertible into  either  kind  of  coin,  might  be  used  for  small 
change. 

12.  Under  such  conditions  no  act  of  legal  tender  would 
be  required,  except  for  the  perpetuation  of  evidence  that 
either  thalers  or  dollars  had  been  offered  in  liquidation  of 
a  contract. 

13.  It  is  not  necessary  to  the  enforcement  of  or  prac- 
tice under  an  act  of  legal  tender  that  the  kind  of  money 
in  which  a  legal  tender  is  to  be  made  should  be  specified, 
provided  there  is  but  one  lawful  coin  under  one  name. 

14.  A  tender  of  merchandise  may  be  made,  but  the 
delivery  may  not  be  accepted  because  the  quality  is  not 
what  it  purports  to  be,  even  if  there  is  no  dispute  about 
the  Aveight. 

15.  A  delivery  of  a  given  number  of  pounds  of  cotton 
may  be  tendered,  but  if  the  tender  is  in  troy  pounds  of 
5,760  grains  each,  then  the  tender  is  not  good,  the  pur- 
chaser being  entitled  to  pounds  avoirdupois  of  7,000  grains 
each. 


2o8  TAXATION  AND    WORK. 

i6.  By  analogy,  an  act  of  legal  tender  may  serve  its 
full  purpose  in  perpetuating  evidence  of  an  offer  of  deliv- 
ery of  money  of  one  kind  or  another — each  kind  in  lawful 
coin — without  enforcing  the  acceptance  of  one  kind  or 
the  other. 

17.  Let  it  be  assumed  that  all  mints  were  open  to  the 
free  coinage  of  gold  or  silver,  without  charge  for  the  cost 
of  converting  the  bullion  into  coin,  the  dollar  of  gold  being 
established  by  law  of  the  same  weight  and  fineness  as  it 
now  is  ;  the  thaler  of  silver  being  established  by  law  at 
41 2|-  grains,  nine-tenths  fine,  corresponding  in  all  but  name 
to  the  present  silver  dollar.  Free  coinage  would  then  be 
safe. 

18.  Which  kind  of  coin  would  be  the  one  chosen  by 
buyer  and  seller  as  the  standard  of  their  contracts  ? 

19.  When  contracts  in  dollars  could  only  be  fulfilled 
in  dollars  made  of  gold,  or  multiples  thereof,  and  when 
contracts  in  thalers  could  only  be  fulfilled  in  sWvqv  thaler s, 
would  either  buyer  or  seller  be  likely  to  make  a  contract 
in  thalers  f 

20.  Would  silver  bullion  be  brought  to  the  mint  for 
conversion  into  thalers  ?  Would  any  bank  or  banker 
keep  a  reserve  of  lawful  money  consisting  of  thalers  ? 
Why  not? 

21.  Would  it  not  be  because  the  silver  thaler  might 
not  be  equal  in  value  to  the  gold  dollar? 

22.  Why  not  ?  Would  it  not  be  because  the  silver 
thaler  would  not  be  worth  as  much  after  it  is  melted  as 
the  gold  dollar  is  worth  after  it  is  melted  ? 

23.  Can  a  silver  thaler  of  41 2|-  grains,  nine-tenths  fine, 
stamped  with  the  motto,  "In  God  We  Trust,"  designated 
one  thaler,  be  made  equal  in  value  to  a  dollar  made  of 
gold,  by  an  act  of  legal  tender  ? 

24.  If  a  silver  thaler  cannot  be  made  equal  in  value  to 


SILVER,   BI-METALLISM,   AND  FREE   COINAGE.      209 

a  gold  dollar,  how  can  a  silver  dollar  identical  in  all  re- 
spects, except  in  the  matter  of  two  letters,  be  made  equal 
in  value  to  a  gold  dollar  ? 

25.  Can  a  thing  of  which  the  first  two  letters  of  the 
name  are  ^  <?  be  given  a  value  thirty  per  cent,  in  excess 
of  the  same  thing  under  a  name  of  which  the  first  two 
letters  are  /  h  ? 

26.  Equation: — One  thaler  of  412^  grains  of  silver  nine- 
tenths  fine  being  worth  seventy  cents  in  gold,  how  much 
is  one  dollar  of  412^  grains  of  silver  nine-tenths  fine 
worth  ? 

27.  Can  you  make  one  dollar  of  silver  of  412^  grains 
worth  one  hundred  cents  in  gold  by  forcing  a  creditor  to 
take  it  under  the  penalty  of  losing  his  whole  claim  if  he 
refuses  ? 

28.  What  man  of  common-sense  being  in  possession  of 
capital  valued  at  the  standard  of  gold  at  one  hundred 
cents  on  a  dollar,  would  lend  that  capital  on  credit  subject 
to  the  liability  of  its  being  paid  in  silver  dollars  or  silver 
thalers  ? 

29.  What  does  the  South  need  to-day,  good  credit  or 
bad  money  ? 

30.  What  is  bad  money  ?  Is  it  not  that  kind  of  money 
that  is  worth  less  after  it  is  melted  than  it  purports  to  be 
in  the  coin  ? 

31.  A  silver  dollar  is  worth  less  than  seventy  cents  after 
it  is  melted.     Is  it  good  money  ? 

32.  Can  good  credit  be  established  on  bad  money? 

33.  There  must  be  a  money  of  redemption. 

34.  There  must  be  a  standard  of  deferred  payment. 

35.  That  money  must  be  coin. 

36.  That  coin  must  be  worth  as  much  after  it  is  melted 
as  it  is  in  the  coin,  provided  the  government  makes  no 
charge  for  coinage. 


2IO  TAXATWiY  AND    WORK. 

37.  AH  paper  representative  or  token  money  must  be 
redeemable  on  demand  in  coin  of  full  value — that  is  to  say, 
in  the  money  of  redemption. 

38.  The  money  of  redemption  must  therefore  be  a 
standard  or  denominator  of  all  valuations. 

39.  The  money  of  redemption  must  be  a  standard  of 
deferred  payment, 

40.  International  commerce  is  conducted  or  nominated 
in  terms  of  money. 

41.  Whatever  the  money  of  the  country  from  which 
the  export  is  made,  or  to  which  the  import  is  directed 
may  be,  the  common  denominator  or  standard  of  inter- 
national commerce  has  become  the  pound  sterling. 

42.  What  is  the  pound  sterling? 

43.  There  is  no  coin  of  that  name.  It  is  a  simple  defi- 
nition or  denomination  of  a  given  weight  of  gold. 

44.  International  commerce  is  therefore  conducted  on 
contracts  promising  payment  in  terms  of  weight  of  gold. 

45.  As  there  is  no  coin  of  the  name  of  a  pound  ster- 
ling, actual  balances  are  discharged  by  the  transfer  of  an 
equivalent  weight  of  gold  in  a  concrete  form. 

46.  The  coin  which  is  known  as  the  English  sovereign, 
when  not  worn  in  use,  corresponds  to  the  weight  named 
pound  sterling ;  these  coins  are  used  in  the  settlement  of 
balances. 

47.  In  such  settlements  the  sovereigns  are  customarily 
weighed  out  and  are  rarely  counted,  except  in  the  delivery 
of  a  small  number. 

48.  There  is  no  international  act  of  legal  tender,  there- 
fore contracts  in  pounds  sterling  must  be  liquidated  accord- 
ing to  the  letter  of  the  contract  by  a  just  and  true  weight 
of  metal. 

49.  International  commerce  comes  to  over  seventeen 
thousand  million  dollars  a  year  ($17,000,000,000.00). 


SILVER,   BI-METALLISM,   AND  FREE   COINAGE.      211 

International  Imports  and  Exports.     1890. 

Great  Britain  and  her  colonies $6,000,000,000 

Other  European  countries 8,000,000,000 

South  and  Central  America  and  Mexico 1,300,000,000 

United  States 1,700,000,000 

$17,000,000,000 
(See  Statesman  s   Year-Book.') 

Ill  the  present  year  the  imports  and  exports  of  the 
United  States  may  come  to  $2,000,000,000.00. 

50.  If  purchases  and  sales  to  this  amount  can  be  and  are 
conducted  upon  a  standard  or  denominator  of  weight  of  un- 
coined gold  and  without  the  force  of  a  statute  of  legal  ten- 
der, then  it  follows  that  all  domestic  purchases  and  sales  in 
each  and  every  country  could  be  conducted  in  the  same  way. 

51.  There  is  no  need  of  an  act  of  legal  tender  among 
men  who  intend  to  meet  their  contracts  honestly, 

52.  It  is  not  necessary  that  an  act  of  legal  tender  should 
designate  the  kind  of  money  in  which  the  tender  is  to  be 
made  when  each  coin  is  true  to  its  name. 

53.  No  gold  dollars  are  now  coined. 

54.  A  dollar  is  now  the  denomination  of  a  certain 
number  of  grains  of  gold. 

55.  If  there  were  no  other  coined  dollars  and  no  act 
of  legal  tender  in  this  country,  purchases  and  sales  would 
be  made  in  terms  of  dollars  and  accounts  would  still  be 
kept  in  dollars.  Scrip  convertible  into  dollars  could  be 
issued  to  fill  the  place  of  subsidiary  coin.  Balances  of 
accounts  could  then  be  settled  in  eagles  and  half-eagles, 
and  in  tokens  of  paper  convertible  in  sums  of  five  dollars 
into  half-eagles. 

56.  In  the  international  commerce  between  this  coun- 
try and  Great  Britain  it  is  common  to  ship  bars  of  gold 
in  place  of  coin  to  foreign  countries.  The  liquidation 
being  by  weight  they  serve  the  same  purpose. 


212  TAXATION  AND    WORK. 

57.  International  commerce,  nominated  and  liquidated 
in  terms  of  pound  sterling  by  weight  without  an  act  of 
legal  tender,  is  conducted  at  the  least  charge  for  the  ser- 
vices of  bankers,  and  is  subject  to  the  least  burden  in  the 
settlement  of  accounts. 

58.  International  commerce  has  become  adjusted  to 
these  conditions  from  choice  and  not  by  force  of  law  ;  or 
rather  by  a  process  of  gradual  selection,  as  it  became 
manifest  that  upon  the  standard  of  valuation  known  as 
pound  sterling,  the  safest,  surest,  and  least  costly  method 
of  doing  the  work  would  be  established. 

59.  If  such  are  the  facts,  then  in  reasoning  upon  the 
conduct  of  domestic  commerce,  these  facts  must  be 
considered. 

60.  From  these  facts  principles  may  be  deduced.  A 
principle  is  "  a  rule  of  action  among  human  beings,  or  an 
admitted  truth  that  requires  no  further  proof." 

61.  It  is  an  admitted  truth  that  the  practice  of  nations 
in  the  conduct  of  substantially  all  international  transac- 
tions is  to  denominate  these  transactions  by  a  valuation 
in  pounds  sterling;  it  is  a  rule  of  action  among  human 
beings  to  liquidate  their  international  contracts  without 
resort  to  law,  except  in  case  of  failure  or  bankruptcy; 
especially  without  any  reference  to  acts  of  legal  tender. 

62.  No  one  misses  an  act  of  legal  tender  in  the  con- 
duct of  international  commerce,  because  it  is  an  admitted 
truth  that  requires  no  further  evidence  that  this  form  of 
contract  by  the  weight  of  gold  in  pound  sterling  is  the 
most  beneficial  to  both  parties  in  all  contracts. 

63.  If  such  are  the  facts  in  a  branch  of  trade  in  which 
all  men  are  free  to  act  for  their  own  best  interest,  by 
what  right  can  any  legislator  deprive  them  of  their  free- 
dom of  contract  in  domestic  traffic? 

64.  By  what    right   can   a    legislative    body  force    or 


SILVER,   BI-METALLISM,   AND  FREE    COINAGE.      21 3 

attempt  to  force  the  circulation  of  two  kinds  of  coin  of 
unequal  value,  by  giving  a  debtor  an  option  of  which  it 
deprives  the  creditor? 

65.  Who  will  trust  such  a  nation? 

66.  Who  will  trust  a  State  which  advocates  such  a 
measure  ? 

^"j.  Who  will  trust  the  citizens  of  a  State  by  which 
such  a  measure  is  advocated  ? 

68.  What  more  certain  way  of  destroying  credit  could 
be  devised  ? 

69.  Credit  transactions  are  in  ratio  to  cash  transactions 
as  ninety-five  or  ninety-eight  to  five  or  two. 

70.  An  act  of  legal  tender  could  only  have  been 
originally  conceived  in  fraud,  when  a  despotic  government 
deprived  the  lawful  coin  of  a  part  of  its  weight,  and  then 
forced  its  circulation  among  the  people. 

71.  An  act  for  the  free  coinage  of  silver  dollars  of  the 
present  standard  and  of  full  legal  tender  would  correspond 
to  such  an  act  of  fraud. 

72.  If  it  were  possible  to  impart  value  to  money  by 
legislation,  why  not  use  paper  or  leather  in  place  of  silver? 

73.  The  purchase  of  bullion  would  be  great  folly  if 
value  could  be  imparted  by  law  to  any  circulating  medium 
without  providing  for  its  redemption. 

74  All  the  present  efforts  to  provide  more  money 
have  been  made  in  this  and  other  countries  in  past  times. 

75.  Every  project  now  contemplated  by  the  Farmers' 
Alliances,  the  fiat-money  men,  and  by  the  advocates  of 
free  silver  coinage  under  present  conditions,  has  been 
tried,  and  it  has  failed. 

76.  There  would  be  no  surer  way  to  enable  the  rich  to 
pick  the  pockets  of  the  poor  than  to  pass  an  act  for  the 
free  coinage  of  silver  dollars  at  412^  grains  of  full  legal 
tender  at  the  present  time. 


214  TAXATION  AND    WORK. 

77.  Dating  from  the  opening  of  the  gold  mines  in 
California  and  Australia  about  the  year  1850,  the  ratio  of 
gold  to  silver  being  then  one  to  fifteen  and  one-half,  subject 
to  slight  fluctuations  and  variations  down  to  1873,  more 
gold  than  silver  has  been  added  to  the  monetary  stock  of 
the  world. 

78.  In  later  years  the  proportionate  addition  of  silver 
has  been  greater  than  that  of  gold. 

79.  It  may  be  assumed  that  both  metals  have  depre- 
ciated ;  the  one  metal  gold  having  become  relatively  more 
abundant  and  being  more  suitable  for  bank  reserves  and 
for  international  transactions  has  taken  the  place  of  silver, 
while  silver  may  be  said  to  have  become  depreciated  from 
the  relatively  greater  abundance  of  gold. 

80.  The  use  of  either  metal  in  actual  transactions  by 
passing  the  coin  from  hand  to  hand  or  from  place  to 
place,  has  greatly  lessened  in  proportion  to  the  trans- 
actions by  the  substitution  of  instruments  of  credit  con- 
vertible into  gold  on  demand.  The  more  intelligent  and 
the  more  united  the  people  of  the  different  sections. 
States,  or  nations  become,  the  less  use  they  make  of  the 
actual  coin  and  the  greater  use  they  make  of  bank  notes, 
checks,  bills  of  exchange,  and  other  instruments  of  credit. 

81.  The  intelligence  of  a  given  community  may  be 
accurately  gauged  by  its  banking  facilities  and  by  the 
confidence  reposed  in  banks  and  bankers  by  the  com- 
munity at  large,  each  serving  the  other. 

82.  It  is  alleged  that  because  prices  have  been  reduced 
in  recent  years  therefore  it  is  proved  that  gold  has  be- 
come scarce.  Reference  being  made  to  the  Hamburg 
list  of  prices,  reprinted  in  Atkinson's  Report  on  Bi- 
metallism (State  Dept.,  1887)  or  to  Jevons'  List  of  Prices, 
or  to  the  prices  of  the  London  Economist,  or  to  other 
lists,  it  will  appear  that  the  prices  of  the  necessaries  of 


SILVER,    BI-METALLISM,   AND  FREE    COINAGE.      21$ 

life  are  even  now  higher  on  the  average  than  they  were 
prior  to  1850,  notwithstanding  the  fact  that  the  cost  of 
production  and  distribution,  measured  in  terms  of  work 
rather  than  of  money,  has  been  vastly  diminished. 

83.  Reference  being  made  to  the  ante-war  period  in 
this  country,  1857-1860,  it  may  be  held  that  through  the 
introduction  of  machinery  and  the  application  of  science 
and  invention,  the  people  of  the  United  States  can  now 
produce  and  distribute  one-third  to  one-half  more  of  the 
necessaries  and  comforts  of  life,  applying  thereto  less 
work,  both  measured  by  hours  and  the  intensity  of  the 
effort,  than  in  1857  ^o  i860.     Hence  lower  prices. 

84.  Had  lower  prices  been  due  to  a  scarcity  of  money 
or  a  scarcity  of  gold,  the  wages  or  earnings  of  labor  would 
also  have  been  reduced.  The  wages  or  earnings  of  labor, 
measured  either  in  terms  of  gold  or  its  equivalent  or  in 
what  money  will  buy,  are  now  higher  than  they  ever  were 
before  in  this  or  any  other  country. 

85.  There  have  been  some  difificulties  about  the  supply 
of  actual  money,  and  there  may  now  be  sections  in  this 
country  where  coin  or  paper  money  is  not  supplied  in 
suflficient  measure  to  serve  the  use  of  the  people.  This 
may  be  attributed  to  restrictive  legislation  upon  banking 
and  to  the  limitations  of  the  National  Bank  Act ;  or  else 
to  the  tax  upon  bank-note  circulation. 

86.  There  are  some  indications  of  a  general  character 
which  may  to  some  extent  show  why  there  may  have 
been  a  local  scarcity  either  of  actual  money  or  of  the 
instruments  of  exchange  or  credit,  which  serve  as  money 
— especially  in  the  Southern  States — even  though  the 
volume  of  circulating  medium  in  coin,  notes,  or  certifi- 
cates is  now  very  large — larger  than  for  many  years. 

87.  In  the  year  1882  the  actual  tons  (disregarding  frac- 
tions'*  moved    over   the   railways  of   the    United  States 


2l6  TAXATION  AND    WORK, 

numbered  361,000,000.  Each  ton  was  moved  an  average 
haid  of  109  miles.  The  number  of  tons  hauled  this  dis- 
tance for  every  man,  woman,  and  child  of  the  population 
averaged  6.83,  equal  to  13,660  pounds.  The  charge  for 
this  service  came  to  $9.20  for  each  person. 

88.  In  the  year  1890  the  tons  moved  numbered  701,- 
000,000.  Each  ton  averaged  113  miles'  haul.  The  number 
of  tons  hauled  113  miles  for  each  man,  woman,  and  child 
of  the  population  was  1 1.22,  equal  to  22,440  pounds.  The 
charge  to  each  person  for  this  service  was  $10.56,  Had 
the  charge  per  ton  per  mile  been  as  high  in  1890  as  it  was 
in  1882  the  service  of  the  railways  on  freight  charges  only 
would  have  cost  the  people  $238,000,000  in  excess  of 
what  it  did  cost  them. 

89.  The  population  increased  a  fraction  over  eighteen 
per  cent,  between  those  two  dates,  but  the  railway-freight 
traffic  increased  a  fraction  over  sixty-four  per  cent.  The 
additional  quantity  moved  was  340,000,000  tons  of  food, 
fuel,  fibres  and  fabrics  of  all  kinds,  hauled  113  miles.  If 
valued  as  low  as  twenty  dollars  a  ton  these  figures  represent 
an  increase  in  the  business  transactions  on  one  single  ex- 
change, to  an  amount  only  a  little  short  of  seven  billions 
of  dollars  ($7,000,000,000).  The  average  value  is  probably 
above  twenty  dollars  per  ton. 

90.  Banking  facilities  have  not  increased  in  anything 
like  a  due  proportion  ;  therefore  a  heavier  work  has  been 
thrown  upon  the  circulating  medium.  Therefore  notes, 
silver  certificates,  and  other  instruments  of  credit  have  not 
come  in  rapidly  for  redemption,  because  they  were  re- 
quired for  daily  use.  So  long  as  all  were  directly  or 
indirectly  convertible  into  gold,  parity  with  gold  has  been 
maintained. 

91.  It  is  manifest,  however,  that  no  increase  either  of 
coin,  bank  notes,  certificates,  or  other  similar  instruments 


SILVER,    BI-METALLISM,   AND  FREE   COINAGE.      21/ 

of  credit,  of  one,  two,  five,  or  ten  dollars,  can  begin  to 
meet  the  requirements  of  such  an  enormous  increase  of 
traffic.  It  follows,  therefore,  that  any  restrictive  legisla- 
tion upon  banking  should  be  removed. 

92.  The  tax  upon  the  circulation  of  State  bank  notes 
may  safely  be  removed.  The  present  period  differs  wholly 
from  the  period  known  as  "  wild  cat  banking."  There  is 
now  an  ample  supply  of  coin  or  other  lawful  money  for  all 
interstate  transactions  or  exchanges,  and  for  the  use  of 
travellers  ;  enough  to  remove  all  fears  of  the  former  diffi- 
culties of  obtaining  money  at  par  when  moving  from 
city  to  city,  or  from  State  to  State. 

93.  State  banks  of  issue  may  now  be  safely  organized 
for  granting  credit  in  the  locality  where  they  are  estab- 
lished, or  within  which  their  notes  may  circulate. 

94.  It  will  become  the  duty  of  each  community  to 
establish  the  credit  of  its  own  banks,  and  to  assure  the 
redemption  of  notes  in  the  most  certain  manner,  else 
they  will  neither  circulate  in  that  locality  nor  anywhere 
else. 

95.  Suitable  conditions  for  the  organization  of  banks 
may  be  established  among  the  citizens  of  each  city,  each 
county,  each  township,  and  each  town.  In  sections  where 
banks  and  bankers  are  looked  upon  with  distrust,  money 
will  be  scarce  and  credit  will  continue  to  be  lacking. 
In  sections  where  the  actual  benefit  of  banking  is  recog- 
nized, and  where  sound  banks  are  established,  money 
will  be  plenty,  provided  its  absolute  redemption  in  coin 
of  the  highest  standard  is  assured  under  the  laws  of  the 
State  in  which  such  banks  may  be  organized. 

96.  Under  such  conditions,  wherever  there  are  com- 
modities to  be  moved  there  will  be  plenty  of  money  to 
move  them.  Where  the  quality  of  the  money  is  abso- 
lutely assured,  the  quantity  will  adjust  itself  to  the  spe- 


21 8  TAXATION  AND    WORK. 

cific  need  of  each  intelligent  community,  and  there    will 
always  be  enough. 

97.  When  the  credit  of  the  money  itself  is  impaired, 
neither  banks  nor  bankers  can  serve  the  community. 

98.  When  the  dollar  of  the  United  States  is  as  well 
established  and  its  credit  is  as  well  assured  as  that  of  the 
pound  sterling  of  England,  tlie  commerce  of  the  United 
States  will  assume  such  proportions  as  its  system  of  duties 
upon  imports  will  permit.  Its  possible  magnitude  cannot 
be  determined  while  our  money  is  liable  to  discredit,  and 
our  tariff  obstructs  imports. 

99.  The  propositions  submitted  in  this  treatise  have 
reference  to  existing  conditions.  What  the  effect  of  a 
treaty  of  international  legal  tender  for  the  common  use 
of  gold  and  silver,  interchangeable  at  a  specific  ratio  of 
weight,  might  have  upon  the  value  or  estimation  of  these 
metals  must  remain  to  be  proved,  if  such  a  treaty  can  be 
made. 

Until  then,  so  long  as  there  is  no  international  treaty, 
and  so  long  as  all  international  commerce,  including  that 
of  the  United  States  with  other  countries,  is  denominated 
in  pounds  sterling,  this  country  among  all  others  has  the 
greatest  possible  selfish  interest  in  adhering  strictly  to  the 
gold  standard,  because  the  price  of  all  its  principal  pro- 
ducts is  determined  by  what  the  excess  that  cannot  be 
consumed  at  home  will  bring,  either  in  the  home  market 
on  sales  made  for  export,  or  what  it  will  bring  in  the  for- 
eign markets  to  which  it  may  be  exported.  The  excess 
of  our  exports  of  cotton,  grain,  oil,  and  other  commodities 
to  Great  Britain  over  imports  therefrom  exceeds  $250,- 
000,000  a  year  in  gold  valuation.  If  we  need  gold  more 
than  we  want  the  merchandise  against  which  we  draw 
drafts  in  pounds  sterling  upon  that  balance,  we  may  de- 
mand gold  to  the  extent  of  our  requirements. 


SILVER,    BI-METALLISM,    AND  FREE   COINAGE.      2I9 

If  we  did  not  stop  the  product  of  our  silver  mines, 
nominally  worth  $70,000,000,  in  fact  worth  about  $50,000,- 
000,  by  piling  it  up  in  our  Treasury,  the  export  of  that 
silver  at  its  market  value,  whatever  that  might  be,  would 
be  added  to  our  gold  resources. 

The  gross  product  of  this  country  comes  to  between 
twelve  and  thirteen  billion  dollars  on  a  gold  valuation. 
The  little  petty  product  of  the  silver  mines  bears  the 
ratio  to  our  total  product  of  twelve  hundred  and  fifty 
dollars  to  five  dollars.  Under  the  pretext  of  protection 
to  this  unprofitable  branch  of  industry — against  the  judg- 
ment of  all  the  intelligent  advocates  of  an  international 
bi-metalHc  treaty,  the  free  coinage  of  silver  is  urged.  The 
commerce  of  this  country  has  been  endangered  and  the 
credit  of  the  country  has  been  imperilled  by  this  proposal. 

100.  When  Free  Trade,  qualified  only  by  the  necessity 
of  collecting  a  moderate  revenue  from  duties  imposed  for 
that  purpose,  shall  have  been  established,  and  when  our 
international  commerce  is  conducted  by  the  standard  of 
the  given  weight  of  gold,  which  is  contained  in  a  dollar 
made  of  gold,  without  danger  of  that  standard  being  im- 
paired, the  centre  of  the  commerce  of  the  world  may  be 
changed  from  London  to  New  York. 


CHAPTER    XXVII. 
Volume  of  Trade. 

In  dealing  with  our  monetary  system  it  becomes  expe- 
dient to  attempt  to  establish  the  data  of  the  huge  volume 
of  transactions  which  are  conducted  in  terms  of  money 
within  the  limits  of  our  own  country,  in  a  tolerably  certain 
manner,  since  any  legislation,  beneficial  or  otherwise,  will 
affect  these  transactions  throughout  the  whole  circulation. 
All  purchases  and  sales  imply  the  use  either  of  actual 
money  or  of  checks,  bills  of  exchange,  or  other  instru- 
ments of  credit.  The  one  is  the  shadow  of  the  other, 
inseparable  from  it. 

One  method  which  I  have  adopted  has  been  to  attempt 
to  value  the  merchandise  which  has  been  moved  by  the 
railways.  There  are  no  data  for  the  exact  computation 
of  the  average  valuation  of  the  goods,  wares,  and  mer- 
chandise which  are  moved  over  the  railways  of  this  coun- 
try, yet  one  can  obtain  an  approximate  estimate  in  the 
following  manner.  The  lowest-priced  products  are  per- 
haps moved  the  longest  relative  distances,  but  as  a  rule 
they  are  loaded  upon  the  cars  and  moved  but  once 
because  they  will  not  bear  the  cost  of  handling.  The 
articles  which  are  below  the  value  of  twenty  dollars  per 
ton  consist  mainly  of  ores,  coal,  and  stone.  Our  total 
annual  output  of  coal,  of  ores,  of  iron,  of  limestone  used 
as  a  flux  in  smelting,  and   of  building  stone,  comes  to 

220 


VOLUME   OF   TRADE.  221 

about  two  hundred  million  tons.  A  considerable  part  of 
the  coal  is  used  where  it  is  mined,  and  a  large  part  of  the 
ores  with  another  part  of  the  coal  is  moved  by  water- 
ways, the  rest  is  moved  by  railways. 

Of  the  total  tonnage  moved  by  rail  in  1890  covering 
seven  hundred  million  tons,  one  may  assume  that  one- 
quarter  part  consisted  of  ores,  coal,  and  stone,  at  a  valua- 
tion of  two  or  three  dollars  per  ton,  amounting  in  value  to 
less  than  four  hundred  million, — probably  about  three 
hundred  million  dollars. 

On  the  other  hand,  if  we  compute  the  movement  of 
cotton  by  rail,  the  movement  of  wool,  both  domestic  and 
foreign,  by  rail,  and  the  movement  of  hemp,  sisal,  and 
other  fibres  which  are  converted  into  cordage,  twine,  flax, 
and  other  fibrous  substances,  these  fibres  only  would  reach 
a  tonnage  of  about  two  and  a  half  million  tons,  of  which 
probably  two  million  tons  are  moved  by  rail.  The  value 
of  the  wool  is  from  twenty  to  thirty  cents  per  pound,  of 
cotton  seven  to  nine  cents,  other  fibres  varying  greatly. 
It  is  probable  that  the  total  value  of  these  fibres  would 
very  nearly  equal  that  of  the  coal,  ore,  and  stone,  even 
before  they  are  converted  into  their  secondary  forms.  If 
moved  again  after  their  first  conversion  they  would  come 
to  a  very  much  greater  sum. 

Having  dealt  in  this  valuation  only  with  coal,  ores, 
stone,  and  fibres,  we  have  computed  the  value  of  less 
than  one-third  the  actual  tonnage  of  the  railways,  leaving 
the  products  of  the  forest  and  of  the  field  still  to  be 
dealt  with. 

There  is  no  exact  measure  of  the  product  of  the  forest. 
A  ton  of  wood  will  cover  from  two  to  three  thousand  feet, 
board  measure,- — more  or  less  according  to  the  kind  of 
timber.  Sawed  lumber  is  worth  from  ten  to  sixty  dollars 
per  thousand  feet,  board  measure.    Therefore  the  products 


222  TAXATION  AND    WORK. 

of  the  forest,  even  in  their  crude  condition,  may  vary  in 
valuation  from  thirty  to  one  hundred  and  fifty  dollars 
per  ton. 

Food  products,  however,  constitute  the  larger  element 
in  the  railway  traflfic,  as  they  do  in  the  family  expenses. 
An  average  grain  crop  weighs  one  hundred  million  tons ; 
corn  is  worth  fifteen  to  twenty  dollars  per  ton  ;  wheat,  from 
twenty  to  twenty-five ;  oats,  from  twenty  to  twenty-five  ; 
meats  on  the  foot,  from  eighty  to  one  hundred  dollars ; 
meats  dressed  or  packed,  one  hundred  and  fifty  to  two 
hundred  dollars  ;  cheese,  one  hundred  and  sixty  to  two 
hundred  and  fifty ;  butter,  four  hundred  to  six  hundred, 
and  so  forth. 

Thus  far  we  have  dealt  only  with  crude  materials  of 
various  kinds,  and  with  some  forms  of  food  in  condition 
ready  for  consumption.  The  only  clue  that  we  have  for 
obtaining  the  exact  value  of  this  class  of  substances  is 
from  the  figures  of  the  tonnage  moved  over  the  Erie 
Canal.  Under  the  rules  of  the  State  all  products  moved 
on  the  canal  are  valued.  They  consist  mainly  of  the 
lower-priced,  cruder,  and  heavier  substances.  The  average 
value  is  thirty-three  dollars  per  ton. 

In  dealing  with  the  railway  trafific  it  would  be  useless  to 
attempt  to  compute  the  value  of  most  of  the  secondary 
products  or  any  of  the  final  forms  named  manufactures, 
such  as  flour,  bread,  canned  provisions,  fish,  fruits, 
machinery,  leather,  boots  and  shoes,  hardware,  clocks 
and  watches,  and  all  the  protean  forms  of  finished  goods 
in  which  nothing  can  be  found  of  any  weight  to  which 
any  consideration  is  due,  that  is  worth  less  than  twenty 
dollars  per  ton  ;  while  great  quantities  range  from  two 
hundred  to  two  thousand  dollars  per  ton,  or  even  more. 

On  the  other  hand,  in  dealing  with  the  railway  traffic 
there  is  no  means  of  telling  how  many  times  the  same 


i 


VOLUME   OF   TRADE.  223 

ton  is  repeated,  or  how  many  times  the  same  lot  of  flour 
or  other  commodity  may  be  reported  in  the  way  from 
Chicago  to  the  sea,  by  the  different  corporations  that 
make  returns.  On  the  whole,  however,  the  largest  trafHc 
is  over  the  ways  of  the  largest  corporations  that  make  but 
a  single  return  covering  a  very  long  distance.  The  average 
haul  per  ton  in  1890  was  one  hundred  and  thirteen  miles. 
It  may  be  assumed  that  most  of  the  heavy  and  very  crude 
substances,  such  as  ores  and  stone,  are  reported  but  once. 
It  is  probable  that  the  greater  part  of  the  grain  is  reported 
but  once,  as  it  is  carried  to  the  mill  on  through  lines. 
Secondary  products  may  be  reported  more  than  once, 
therefore  the  actual  number  of  tons  moved  by  rail  may  be 
less  than  the  apparent  number  reported  ;  but,  on  the  other 
hand,  the  value  which  has  been  put  on  these  secondary 
products  is  very  far  below  the  true  value,  and  the  valua- 
tion of  twenty  dollars  ($20)  per  ton  on  finished  products  is 
very  greatly  below  the  average. 

Mr.  H.  V.  Poor,  the  author  of  The  Raihvay  Manual, 
has  given  close  attention  to  this  subject,  working  by 
different  methods  from  the  ones  which  I  have  employed, 
and  he  has  reached  the  same  conclusion,  to  wit :  that  the 
minimum  value  of  all  the  goods,  wares,  and  merchandise 
moved  over  the  railways  of  the  United  States  is  twenty 
dollars  per  ton. 

In  view  of  these  considerations  one  may  submit  as  a 
fact  that  the  actual  tons  moved  in  1890,  as  listed  in  The 
Railway  Manual,  computed  at  700,000,000  tons,  moved 
one  hundred  and  thirteen  miles,  possessed  a  value  of  not 
less  than  twenty  dollars  per  ton,  or  fourteen  thousand 
million  dollars  ($14,000,000,000)  in  all.  This  merchandise 
was  probably  worth  a  great  deal  more  than  that  sum,  and 
this  is  the  measure  of  only  that  part  of  the  exchange  of 
goods,  wares,  and   merchandise  which   is  worked  by  the 


224  TAXATION  AND    WORK. 

railway  system.  In  each  exchange  in  terms  of  money, 
coin,  notes,  checks,  or  bills  of  exchange  must  pass. 

There  are  other  methods  of  dealing  with  the  same  sub- 
ject, leading  up  to  the  conclusions  which  it  is  necessary 
to  reach  in  order  to  comprehend  the  full  bearing  of  our 
monetary  system.  If  we  should  compute  the  product  of 
the  people  of  this  country  at  two  hundred  dollars'  worth 
per  head,  or  at  six  hundred  dollars'  worth  as  the  average 
product  of  each  one  in  three  of  the  population  who  is 
occupied  for  gain, — our  gross  product  comes  to  twelve 
thousand  five  hundred  million  dollars'  worth  at  the  places 
of  final  consumption  ($12,500,000,000).  It  is  probable 
that  five  hundred  million  dollars'  worth  may  be  consumed 
at  the  place  of  production  ;  all  the  rest  is  bought,  sold,  or 
exchanged  once,  twice,  thrice,  or  more.  All  the  rest  is 
moved  by  lake,  river,  rail,  wagon,  or  by  hand  once,  twice, 
thrice,  or  more,  and  every  transaction  is  conducted  in  terms 
of  money.  Grain  and  meat  are  sold  by  the  farmer  to  the 
miller  or  the  packer  ;  moved  to  the  elevator,  to  the  flour- 
mill,  to  the  creamery,  or  the  packing-house  ;  moved  again 
to  the  wholesale  dealers,  and  again  to  the  distributors. 
Fibres  are  removed  from  the  field  to  the  factory,  from  the 
factory  to  the  bleachery,  from  the  bleachery  and  dye- 
house  to  the  clothier  ;  moved  again  to  the  great  centres 
of  distribution,  and  moved  again  to  the  place  where  they 
are  finally  sold.  Even  in  the  process  of  conversion  into 
clothing,  fabrics  are  cut  in  the  cities  and  are  moved 
hundreds  of  miles  to  be  sewed  into  garments  in  farmers' 
families  and  returned.  Metals  are  moved  from  the  furnace 
to  the  machine-shop  and  to  the  tool  factory,  and  from 
thence,  once,  twice,  or  many  times.  In  every  movement 
there  is  purchase  and  sale  conducted  in  terms  of  money. 

All  that  we  can  do  is  to  move  something  ;  we  can  make 
nothing.     The  work  of  life  is  a  conversion  of  force,  of 


VOLUME   OF   TRADE.  22 5 

which  the  end  is  to  supply  to  each  man,  woman,  and  child 
with  from  two  and  one-half  to  five  pounds  of  food  a  day, 
with  from  ten  to  twenty  pounds  of  cotton  or  wool  a 
year  for  our  backs,  with  a  few  boards  over  our  heads 
for  a  dwelling-place.  Food,  shelter,  and  clothing?  What 
else  can  the  richest  man  consume  ?  What  else  will  satisfy 
the  needs  of  the  poorest  ?  There  may  be  relative  and 
very  great  inequality  in  the  distribution  of  the  necessaries 
of  life,  but  there  must  be  substantial  equality  in  the  con- 
sumption of  the  materials  by  which  we  exist.  The  greatest 
inequality  is  in  the  provision  for  shelter.  How  to  house 
the  crowds  in  the  great  cities  is  the  hardest  problem  which 
we  are  called  upon  to  solve. 

If  then  we  may  value  the  product  as  stated, — if  we 
may  compute  the  whole  exchange  by  railway  at  the  sum 
given, — it  would  seem  that  the  measure  of  all  our  business 
transactions  in  purchases  and  on  sales  or  exchange  of 
product  for  product,  all  of  which  must  be  stated  and 
measured  in  terms  of  m.oney,  cannot  come  to  less  than 
forty  thousand  million  or  forty  billion  dollars  in  a  year 
($40,000,000,000).  All  these  dealings  imply  delivery  of 
goods  by  water-ways,  by  railways,  by  wagon,  and  by  hand  ; 
heavy  products  by  water-ways  and  railways, — package 
and  wholesale  distribution  mainly  by  railway, — parcel 
delivery  by  wagon  or  by  hand  costing  more  than  either 
of  the  other  methods.  It  costs  as  much  for  the  parcel 
delivery  of  a  loaf  of  bread  in  cities  as  it  does  to  raise  the 
wheat,  mill  it,  and  move  it  to  the  bakery  and  convert  it 
into  bread. 

If  the  measure  of  all  business  transactions  is  forty 
billion  dollars,  that  part  which  is  reported  in  the  railway 
traflfic  must  come  to  more  than  one-third  or  more  than  the 
fourteen  billion  dollars  at  which  I  have  computed  it.  In 
every  one  of  these  transactions  in  the   actual  things  that 


226  TJXA  r/OAT  AND    WORIC. 

are  required  to  support  life,  the  shadow  passes  with  the 
substance.  Money  of  some  kind,  a  promise  of  money, 
or  a  representative  of  money  of  some  kind,  goes  with 
each  purchase  and  each  sale. 

In  dealing  with  our  monetary  system,  legislators  touch 
the  very  nerve-centre  of  this  immense  volume  of  mutual 
services.  It  is  computed  that  ninety-five  per  cent,  at  least 
of  these  purchases  and  sales  are  liquidated  by  the  use  of 
symbols  or  notes, — by  checks,  bills  of  exchange,  and  other 
instruments  of  credit. 

Again,  we  may  add  to  this  great  volume  of  trade  in  the 
necessaries  of  life  the  transactions  in  real  estate,  stocks, 
bonds,  and  professional  services.  All  of  these  transactions 
— with  very  rare  exceptions — are  liquidated  by  checks  or 
other  instruments  of  credit.  Again  we  may  reach  some 
conception  of  the  magnitude  of  our  transactions  from  the 
figures  of  the  bank  clearing-houses.  The  annual  volume 
of  the  whole  traf^c  in  goods, wares,  real  estate,  and  securi- 
ties cannot  be  less  than  one  hundred  and  fifty  thousand 
million  or  one  hundred  and  fifty  billion  dollars  ($150,000,- 
000,000),  and  may  be  more.  To  any  one  to  whom  these 
figures  carry  any  conception  of  the  functions  of  money, 
the  paramount  importance  of  tlie  quality  of  our  coin, 
rather  than  its  quantity,  becomes  apparent. 

At  the  instance  of  the  representatives  of  the  little  petty 
product  of  our  silver  mines,  which  is  worth  only  fifty 
million  dollars  in  fact,  but  for  which  the  owners  wish  to 
get  seventy  million  at  the  cost  of  the  tax-payers,  there 
has  been  great  danger  that  this  whole  volume  of 
transactions  might  be  thrown  into  disorder  and  confusion. 

It  is  extremely  difficult,  however,  to  reason  on  these 
huge  amounts  ;  we  must  bring  the  measure  of  all  these 
transactions  down  to  the  unit  of  the  family.  We  have 
computed  our  product  at  two  hundred  dollars  per  head, 


VOLUME   OF   TRADE.  22/ 

which  is  very  near  the  mark.  From  this  product,  what- 
ever it  may  be,  all  wages,  earnings,  profits,  rents,  interests, 
taxes,  and  stealings  are  derived.  These  are  the  divisions 
or  shares  into  which  these  products  are  converted  in  terms 
of  money  in  the  processes  of  exchange  by  purchase  and 
sale.  If  this  is  the  measure  of  all  there  is,  then  it  follows 
of  necessity  that  by  so  much  as  some  may  secure  more, 
others  must  secure  less.  One  in  three  of  our  population 
is  at  work  for  gain  ;  the  average  family  numbers  five. 
The  incomes  of  by  far  the  greater  number  of  the  families  of 
this  country  (five  in  number  per  family)  are  less  than  one 
thousand  dollars ;  it  is  probable  that  the  incomes  of  more 
than  one-half  of  the  population  of  this  country  are  less  than 
from  six  hundred  to  eight  hundred  dollars  a  year  for  each 
family  group  of  five  persons. 

If  my  computation  of  the  trade  and  commerce  of  this 
country  in  the  necessaries  and  comforts  of  life  is  approxi- 
mately correct,  i.  e.,  if  each  article  is  bought  and  sold 
three  times  on  its  way  from  the  original  producer  to  the 
consumer,  then  the  transactions  or  purchases  and  sales 
are  more  than  three  times  the  value  of  the  total  product. 
If  this  will  be  admitted,  it  follows  that  the  food,  fibres,  and 
fabrics  on  which  a  family  spending  six  hundred  to  eight 
hundred  dollars  a  year  is  supported,  will  correspond  to 
sales  amounting  to  two  thousand  dollars  or  more  in  each 
year. 

More  than  ten  per  cent,  of  all  who  are  occupied  for  gain 
or  engaged  in  the  services  of  the  community  are  occupied 
in  the  mere  processes  of  trade  and  transportation.  The 
merchants,  tradesmen,  draymen,  the  clerks,  the  railway 
employees,  and  the  salesmen  occupied  at  the  present  time 
number  at  least  2,400,000  persons  out  of  a  total  of  23,- 
000,000  who  are  now  occupied  for  gain,  and  upon,  whose 
work  the  subsistence  of  65,000,000  depends. 


228  TAXATION  AND    WORK. 

Since  January  ist,  1879,  ^^^  this  work  has  been  compu- 
ted by  the  standard  of  the  lawful  unit  of  value  of  a 
dollar  made  of  gold.  Under  the  pretext  that  the  prices 
of  the  necessaries  of  life  are  now  so  low  as  not  to  leave  a 
sufficient  profit  to  those  who  control  the  work  of  produc- 
tion and  distribution,  an  attempt  is  now  being  made  to 
increase  the  volume  of  money  in  circulation  by  the  free 
coinage  of  silver  dollars,  which  are  worth  less  than  seventy 
cents  on  a  dollar  in  gold.  By  such  an  act  our  standard 
of  value  would  be  changed,  gold  would  be  driven  from 
circulation,  and  the  whole  volume  of  transactions  would 
require  a  re-adjustment  in  order  to  bring  it  to  an  uncertain 
and  variable  silver  unit  in  place  of  the  established  gold 
unit  of  value. 

This  act  is  advocated  without  regard  to  the  concurrence 
of  other  nations,  and  without  regard  to  the  relations  of  this 
country  to  international  commerce. 

The  promoters  of  this  act  overlook  the  fact  that  while 
prices  have  fallen  since  the  specie  standard  of  payment  was 
re-established  on  January  ist,  1879,  ^^e  wages  of  labor 
have  constantly  risen,  subject  to  occasional  small  fluctu- 
ations. It  is  for  the  benefit  of  the  workmen  that  prices 
should  be  kept  down  so  long  as  wages  mount  higher  and 
higher,  until  they  are  now  higher  than  they  ever  were  be- 
fore. So  long  as  products  increase  in  ratio  to  consump- 
tion, it  is  not  true  that  the  profits  are  insuflficient.  Our 
product  has  increased  in  the  period  that  has  elapsed  since 
1879  "lore  rapidly  than  it  ever  did  before.  Shall  legisla- 
tors be  permitted  to  retard  progress  both  in  profits  and 
wages?  The  maintenance  of  the  rate  of  wages  depends 
upon  the  established  credit  of  the  unit  of  value  being  un- 
impaired ;  on  the  stability  of  our  unit  of  value  without 
disorder  and  without  discredit  depends  the  continuance 
of  this  vast  volume  of  transactions  in  which  every  family 


VOLUME   OF    TRADE.  520 

spending  from  six  hundred  to  seven  hundred  dollars  per 
year  has  a  special  interest  to  the  amount  of  two  thousand 
dollars'  worth  of  purchases  and  sales.  The  unit  of  value 
must  be  maintained  to  do  this  work. 

The  effort  to  deprave  the  currency  has  already  caused 
a  check  to  production  and  has  impaired  wages. 

It  is  possible  that  such  an  act  may  pass  the  Congress 
of  the  United  States,  but  upon  the  instant  that  the  de- 
preciation begins  and  credit  is  shaken,  or  at  the  very 
instant  when  gold  goes  to  a  premium  of  only  one  per  cent., 
the  free  coinage  of  debased  dollars  will  be  stopped,  what- 
ever party  may  be  in  power.  The  mass  of  the  people  will 
insist  that  the  present  standard  of  value  shall  be  main- 
tained, and  the  credit  of  our  coined  money  shall  all  be  at 
par.  They  will  not  submit  to  use  any  coin  that  is  worth 
less  than  seventy  cents  as  compared  to  the  gold  dollar,  or 
its  equivalent,  in  which  their  wages  are  now  paid. 

The  masses  of  the  people  will  not  submit  to  the  free 
coinage  of  any  kind  of  a  dollar  of  which  the  metal  is  not 
worth  as  much  after  it  is  melted  as  it  purports  to  be  in  the 
coin.  The  classes  who  would  mislead  them  for  the  private 
benefit  of  the  owners  of  the  silver  mines  will  be  swept 
away  like  chaff  before  the  cyclone.  A  tax  imposed  upon 
the  working  people  of  this  country  for  the  benefit  and 
profit  of  a  few  capitalists,  whose  gains  are  only  to  be 
secured  by  raising  the  prices  and  lowering  the  value  of 
wages,  will  not  be  submitted  to  for  a  single  day  after 
the  fraud  is  exposed. 

In  conclusion  of  this  branch  of  the  subject,  it  may  be 
remarked  that  while  the  measure  of  all  our  transactions, 
purchases,  and  sales,  may  come  to  forty  billion  dollars  a 
year  ($40,000,000,000),  the  measure  of  our  exports  and 
imports  in  1890  amounted  to  seventeen  hundred  million 
dollars  ($1,700,000,000)  in  1890.     In  the  last   fiscal  year, 


230  TAXATION  A  AW    irOKA'. 

owing  to  our  excessive  exports  of  food  products  to  meet 
the  scarcity  in  Europe,  exports  and  imports  combined 
may  come  to  two  thousand  million  dollars  ($2,000,000,000) 
or  two  billion.  If  each  subject  of  export  and  import  is 
dealt  in  three  times,  then  the  volume  of  transactions  cor- 
responding to  our  foreign  trafific  would  be  six  billions  in  a 
total  of  forty  billions  of  foreign  and  domestic  trade  com- 
bined, or  fifteen  per  cent. 

The  attempt  has  been  made  to  bring  into  conspicuous 
notice  the  vast  volume  of  our  domestic  traffic  as  com2:)ared 
to  our  foreign  trade,  yet  the  advocates  of  McKinlcyism 
venture  to  impute  the  increasing  welfare  of  this  country 
to  the  obstruction  of  imports  under  the  McKinley  tariff 
act.  It  may  be  admitted  that  in  spite  of  this  obstructive 
measure  the  people  of  this  country  prosper,  but  our  prog- 
ress is  like  that  of  a  strong  man  into  whose  boot  a 
McKinley  pebble  or  projecting  shoe  peg  has  been  driven  ; 
it  makes  him  halt  and  lag  behind  in  the  race  instead  of 
leading,  but  does  not  prevent  him  from  making  progress. 
Foreign  debts  and  armies  are  greater  obstructions  to  the 
progress  of  our  competitors,  and  these  may  be  a  greater 
burden  than  even  a  tariff  as  obstructive  as  the  McKinley 
tariff  act. 

It  is  singular  that  the  very  same  persons  who  ask  for 
greater  appropriations  for  improving  our  rivers  and  har- 
bors, in  order  to  facilitate  the  transportation  of  our  goods 
and  wares,  and  who  ask  for  subsidies  and  bounties  for 
steamships  in  order  to  communicate  with  foreign  coun- 
tries, and  who  in  every  other  way  attempt  to  remove  the 
obstructions  to  commerce,  have  yet  raised  an  obstruction 
to  foreign  commerce  higher  and  higher  by  the  way  of 
prohibitive  duties  upon  the  goods  which  are  the  only 
means  of  payment  for  our  own  commodities.  Our  com- 
merce, however,  goes  on  in  a  lame  and  halting  way  in 


VOLUME   OF   TRADE.  2$  I 

spite  of  measures  which  often  work  the  very  reverse  of 
what  was  intended  by  them,  as  in  the  case  of  the  duties 
upon  wool,  inviting  larger  imports  at  higher  cost  in  place 
of  benefiting  the  domestic  wool  grower. 

It  is  remarked  in  Motley's  History  of  the  Netherlands 
that  throughout  their  long  and  bitter  struggle  with  Spain 
the  Dutch  maintained  free  commerce  with  all  the  world, 
raising  their  revenue  by  taxes  which  at  one  time  were 
said  to  have  taken  one-half  the  product  of  the  country, 
yet  at  the  end  they  came  out  strong  and  rich,  "  and  while 
producing  not  one  single  grain  of  wheat  they  yet  ate  the 
whitest  bread  in  Europe." 

England  has  become  the  great  centre  of  the  world's 
commerce,  and  London  has  become  the  monetary  centre 
and  clearing-house  of  the  world,  under  two  conditions : 
namely,  first,  the  free  import  and  the  free  export  of  all 
commodities  that  are  manufactured  or  produced,  subject 
only  to  a  tariff  for  raising  a  moderate  sum  from  duties 
upon  the  import  of  spirits,  wines,  liquors,  tobacco,  spices, 
and  fruits.  Second,  London  has  become  the  monetary 
centre  and  clearing-house  of  the  world's  transactions  be- 
cause of  the  superiority  and  safety  of  its  unit  of  value. 
That  unit  of  value  consists  of  the  grains  of  gold  which 
are  nominated  pound  sterling,  and  which  can  be  delivered 
in  English  coined  sovereigns  only  when  such  coins  are  of 
full  weight. 

Were  equal  facilities  for  commerce  and  equal  assurance 
of  the  stability  of  our  standard  of  value  granted  and 
given  by  the  United  States,  the  centre  both  of  the  world's 
commerce  and  of  the  clearing-house  of  nations  might  be 
transferred  to  this  continent. 

So  long  as  the  McKinley  act  remains  in  force  and  so 
long  as  there  is  a  shadow  of  doubt  as  to  the  stability  of 
our  unit   of  value,   this   change   cannot   occur.      As   the 


232  TAXATION  AND    WORK'. 

Dutch,  producing  not  a  grain  of  wheat  yet  ate  the  whitest 
bread  in  Europe,  so  the  people  of  the  United  States  may 
command  the  gold  of  the  world,  even  if  not  a  single 
dollar's  worth  were  produced  in  our  own  mines,  when- 
ever we  will. 

The  estimates  of  the  revenue  from  liquors,  tobacco,  and 
miscellaneous  permanent  receipts  presented  in  the  early 
chapters,  have  been  justified  by  the  government  receipts 
for  eleven  months  of  the  present  fiscal  year.  They  will 
suflfice  to  cover  all  expenditures  except  pensions,  so  far 
as  one  can  now  tell.  They  may  sufifice  next  year  if 
excessive  appropriations  are  not  made  for  rivers  and 
harbors  and  other  purposes  which  are  wholly  within  the 
control  of  Congress,  and  if  the  purchase  of  silver  bullion 
is  stopped — not  otherwise. 


CHAPTER  XXVIII. 
Taxation  by  Bad  Money. 

Since  the  two  foregoing  chapters  on  our  monetary 
system  were  completed  I  have  received  John  Henry 
Norman's  book  upon  TJic  World's  £A:c/ian£;-£'s,  published 
by  Sampson  Low,  Marston,  &  Co.,  London. 

In  this  work  simple  rules  are  given  for  computing  the 
relative  value  of  all  the  coins  of  the  world  by  the  relative 
weight  in  grains  of  pure  gold  or  pure  silver  in  each  coin. 
That  is  manifestly  the  only  true  method  of  determining 
their  value,  as  the  proportion  of  alloy  in  each  coin  varies 
in  different  countries. 

For  instance,  the  gold  dollar  of  the  United  States, 
which  is  the  lawful  unit  of  value,  weighs  twenty-five  and 
eight-tenths  grains  (2  5y^o^),  but  it  consists  of  nine  parts  of 
pure  gold  and  one  part  of  alloy  ;  the  coin  is  nine-tenths 
fine,  it  therefore  contains  twenty-three  and  twenty-two- 
hundredths  grains  {2^^q)  of  pure  gold. 

The  English  pound  sterling  is  a  name  or  definition  of 
the  weight  of  one  hundred  and  thirteen  grains  and  a  very 
small  fraction  (i  13.0016)  of  pure  gold.  The  coin  named 
sovereign,  which  is  the  equivalent  of  the  pound  when  of 
full  weight,  consists  of  916.667  parts  of  gold  and  83.333 
parts  of  alloy,  the  coin  being  seven-eighths  fine. 

The  alloy  in  the  coinage  of  other  countries  varies  in  some 
cases  from  either  standard,  therefore  in  order  to  ascertain 
the  relative  value  of  any  coin  the  computation  of  the 
value  for  such  comparison  must  be  made  by  the  relative 
weight  of  pure  metal. 

The  elements  of  weight  and  valuation  are  inseparable ; 
there  is  no  method  of  comparing  value  except  by  weight, 

233 


234 


TAXATION  AND    WORK. 


and  no  act  of  any  country  can  change  or  alter  the  value 
of  a  coin  except  by  adding  to  or  taking  off  a  part  of  the 
pure  metal. 

This  computation  I  have  tabulated  from  Norman's  work, 
and  the  tables  below  have  been  carefully  corrected  by  him. 

It  would  be  well  that  the  following  tables  should  be 
ofificially  verified  by  the  officers  of  the  United  States  Mint, 
or  that  corresponding  tables  should  be  given  if  the  com- 
putations have  already  been  made.  I  am  not  aware  that 
any  such  tables  exist." 

Gold  coins  named  in  Norman's  work,  with  weight  of 
pure  gold  in  each  stated  in  troy  grains,  and  relative  value 
as  compared  to  the  gold  dollar  of  the  United  States : 


Country. 


United  States , 


Great  Britain.. 

France  

Germany 

Netherlands. . . 
Denmark.    .  . . 

Austria 

Russia . 

Turkey 

Portugal 

Egypt 

Mexico 

Cuba 

Chili 

Brazil 

Peru 

Uruguay 

Argentine 

Japan  

Philippines  . . . 

India 

Persia 

Tunis 

Newfoundland 


Name  of  coin. 


Dollar.... 
Dollars  . . 
Dollars  . . 
Sovereign. 
Francs . . . 

Marks 

Guilders. . 
Crowns.. . 
Florins. . . 
Roubles . . 
Pound. . . . 
Milreis. . . 
Pound. . . . 
Pesos  . . . . 

Peso 

Pesos  . . . . 
Milreis. . . 

Sols 

Pesos  . . . . 
Dollars  . .  . 

Yen 

Peso 

Rupees . . . 
Thoman.  . 
Piastres  . . 
Dollars .  . . 


Grains  of 
pure  gold. 


23. 
ii6. 
232. 
113. 

89, 
no, 

93. 
124. 

89. 

92. 
102. 
125. 
114. 

365. 
21. 
105. 
126. 
224. 
120. 
112. 

115. 

22. 
165. 

52. 
135. 

47- 


21997 

09985 

19970 

0016 

60701 

6268 

45985 

4541S 

60701 

57403 
0S04 

4425 

7781 

45753 

5019 

92533 

81996 

01753 
0750 
00875 
74262 

83705 

0000 

96536 

55776 

07895 


Relative 
value. 


fi.oo 

500 
10.00 

4.866 

3.859 
4.764 
4.025 
5-360 

3.859 
3.986 
4.396 
5.402 
4.943 
15.739 

.926 
4.562 
5.461 
9.647 
5.170 
4.825 
4.984 

•  9834 
7.106 
2.281 
5.838 
2.027 


■  See  tables  compiled  by  Mr.  E.  O.  Leech,  Director  of  the  Mint,  on  pages 
236  and  237,  which  have  been  recently  added. 


TAX  A  TIOM  BY  BAD  MONE  V. 


235 


Silver  coins  named  in  Norman's  work,  with  weight  of 
pure  silver  in  each  stated  in  troy  grains,  and  relative 
value  as  compared  to  the  silver  dollar  of  the  United  States 
of  412^  grains  nine-tenths  fine,  371.2514  pure  ;  also  their 
relative  value  in  gold  at  the  present  price  of  silver  bullion. 


Country. 


I. 
2. 

3- 

4- 
5- 
6. 

7- 
8. 

9- 
10. 
II. 
12. 

13- 
14. 

15- 
16. 

17- 
18. 
19. 
20. 
21. 
22. 

23- 
24. 

25- 

26. 

27. 
28. 
29. 


United  States. 
Great  Britain. . 

France  

Germany 

Netherlands. . . 

Denmark 

Austria 

Russia 

Turkey 

Portugal 

Egypt 

Mexico 

Cuba . 

Chili 

Brazil 

Peru 

Uruguay  

Argentine 

Japan  

Philippines  . . . 

India 

Persia 

Tunis 

Newfoundland 

Java 

Tripoli 

Siam 

Shanghai,  China 
China 


Name  of 
coin. 


Dollar 

Shilling. . . 

Franc 

Mark 

Guilder  . . . 
Crowns  . . . 
Florin  .... 
Rouble.  .. . 
Piastres  . . . 
Testoons . . 
Pound  .... 
Dollar 

Dollar  or  peso 

Milreis 

Sol 

Peso 

Dollar  or  peso 

Yen 

Dollar 

Rupee 

Kran. 

Piastre  

Half  dollar  . . 

Dollar 

Mahbub 

Tical 

Trade  dollar. 

Tael — weight 

not  a  coin. 


Grains  of 
silver. 


371-2514 
80.72937 

69-4455 
77.1617 

145-8357 
185.1882 
171.4703 
277.7221 
308.1168 
176.S284 
173.6139 
377-0586 

347.227S 
360.7311 
347-2278 
347-2278 
347.2278 
37440 
360.5614 
165.0000 
63.0316 

43-0145 
168.1871 

376.1434 
313-2101 
206.2850 
378.0000 

513-0572 


Relative 

value  in 

silver  at  16 

parts  of 
silver    to   i 
part  of  gold. 


$1.00 
.2174 
.1S705 
.20784 
.3928 
.4988 
.4618 
-74807 
.8299 

-4763 

.4676 

1. 0156 

-9352 
.9716 
-9352 
-9352 
-9352 
1.0084 
.9712 

•4444 
.1697 
.1158 

•  4532 
1.0113 

.8434 

•  5556 
1. 0182 

1. 3819 


Value  at 
30  per  cent, 
discount  in 

ratio  to 
gold. 


.70 

.1522 

.1310 

.1456 

•2751 

•3493 

.3235 

.5240 

.5910 

•3337 
.3276 
.7127 

•  6551 
.6805 

•6551 
-6551 
-6551 
.7060 
.6804 
.3111 
.1190 
.0813 

•  3x73 

•  7093 
,6910 
.3892 
.7128 

.9673 


"  The  above  silver  equivalents  are  found  by  dividing  the  grams  of  pure 
silver  in  each  money  of  current  in  the  large  table  of  the  Guide  by  24.0567 
grams."— J.  H.  N. 


236 


TAXATION  AND    WORK. 


In  making  these  tables  through  the  aid  of  Mr.  Norman  I  wa: 
not  aware  that  a  simihir  valuation  had  been  made  by  Mr.  Ed  ware 
O.  Leech,  Director  of  the  Mint,  which  is  to  be  found  in  Johnson'i 
Encyclopaedia,  edition  of  1888,  Vol.  II.,  pages  144-146,  under  thcfci 


TABLE  OF  FOREIGN  COINS. 
Gold. 


Countries. 


Argentine  Republic. 

Austria-Hungary 

Bolivia 

Brazil 

Bulgaria 

Central  American  States 

Costa  Rica  "| 

Guatemala 

Honduras      >-   

Nicaragua 

Salvador.      J 

Chili... 

Colombia 

Cuba 

Equador 

Kgypt 

Finland 

German  Empire 

Great  Britain 

Hayti 

India 

Japan 

Latin  Union 

{Belgium  (francs) 
France           " 
Greece  (drachmas) 
Italy  (liras) 
Switzerland  (frs.). 

Mexico 

Netherlands 

Persia 

Peru 

Portugal 

Roumania 

Russia 

Scandinavian  Union 

Denmark 

Norway 

Sweden 

Servia 

Spain 

Tunis 

Turkey 

Venezuela 


Standard. 


Double 

Single  Silver 
Single  Silver, 
Single  Gold.. 

Double 

Single  Silver 


Double 

"       Silver 

"       Gold 

"       Silver 

"        Gold 

"        Gold 

"       Gold 

"       Gold 

"       Gold 

"       Silver 

Double  (practically 

Single  Silver) 

Double 


Single  Silver 

Double 

Single  Gold  (recent). 

Silver 

Gold 

Double 

Single  Silver 

Single  Gold,. ,,,..,, 


"         (practically 

Gold). 

Single  Silver 


Denomination  of  Coins. 


Argentine 

(8  Guldens)  8  Florins, 

Onza 

20  Milreis 

Alexander  (20  Leii).. 
fOnza      or      Doubloon 
(      coined  prior  to  18 


'  20     Pesos,       coined 
(      since  1870 

Condor 

Double  Condor 

Doubloon  (Isabella)... 

Double  Condor 

Eg'y  Pound 

20  Markkaa 

Double  Crown  (20  marks) 

Sovereign 

10  Gourdes 

Mohur  (15  Rupees). . 


Yen 

100  francs. 

50  francs. 

20  francs. 


Peso 

10  Florins 

Tomans 

Sols 

Crown  (to  Milreis).. . . 

Leis 

Imperial  (10  Roubles). 

20  Kroner 

10  Kroner 


Milan  (20  Dinars). 

25  Pesetas 

100  Piastres 


^O 


500  Piastres  . 
100  Bolivars. 


124.451 
99.561 
385.800 
276.695 
99.561 

4I7.590 


497.806 

23s -.384 
497 . 806 
129.538 
497. 80 J 
131. 172 
99.561 
122.915 
i23.27o[9i6§ 
248. 903 1 900 
000  9i6§ 


25.720 
497 . 806 
248 . 903 
99.561 
49.780 
24 . 890 


26. Ill  875 


103.703 
87.962 
497.806 
273. 686 
99-561 
199-133 
138.280 
69.140 


99.561 
124.451 
300.924 

556.817 
497.806 


900 
900 
900, 
9163 
900 
900 
900 
900 


41  «  C 

s  c'n 

P-4  8  Ml 


>;^i 


ii2.oo6'$4.82.3  , 
60s  3-85.9 
220  14.95.4  ■\\ 


36s -390 


10.92.3 
3-85.9 

iS-73-6 


448.025  19 

211.845 
448.025 
116.584 
448.025 
114.775 
89.605 
110.623 
113.000 
224.012 
165.000 


23.1 
448.025 

24.0 
289.605 

44.802 

22.401 

22.847 

93-332 

79 . 1 66 

448.025 

250.878 

89.605 

179.219 

124.452 

62.226 


89.605 
112. 006 
270.831 

510.416 
448.025 


29-5 

12.3 

29. S 
01.7 

29. s 
94.3 
85.9 

76.4 
86.65 
64.7 

10.6 

99-7 
29. s 
64.7  I 

85.9 

92.9, 

96.4 

98.4 
01.9 
40.9 
29-S 
80.4 

85.9 
71.8 

35. 9 

68.0 


3.85.9 

4.82.3 
II .66.4 

2 1 . 98 . 2 
19.29.S 


TAXATION  BY  BAD   MONEY. 


237 


rticle  "  Coinage."  From  this  table  compiled  by  Mr.  Leech,  con- 
ensed  tables  have  been  prepared,  which  are  given  below,  giving 
he  value,  as  estimated  by  him,  of  the  principal  coins  mentioned 
y  Mr.  Norman,  in  which  some  slight  variations  may  be  found 
i'om  the  previous  tables,  and  some  further  valuations  are  added. 

TABLE  OF  FOREIGN  COINS. 

Silver. 


Countries. 


rgentine  Republic 

i  ustria-Hungary 

olivia 

razil 

ulgaria 

entral  American  States. 
Costa  Rica    I 
Guatemala    I 

Honduras      \   

Nicaragua 
Salvador        J 

iiiH... 

oloMibia 

uba 

I    quador 

I   gypt 

[   inland 

I    erman  Empire 

reat   Britain 

ayti 

..lia 


M>?n  ■;••. 

:Uin   Union 

f  Belgium  (francs) 

France  "        

-j   Greece  (drachmas)... 

I    Italy  (liras) 

[  Switzerland  (francs). 

exico 

etherlands 

ctsia  


ortiigal 

Mumania 

ussia 

;andinavian  Union. 

Denmark 

Norway 

Sweden 

;rvia  

pain 

unis 

virkey 

euezuela , 


Denomination 
of  Coin. 


Peso 

Gulden  (florin,.. . 

Boliviano 

2  Milreis 

2  Leii 

Peso 

J  Peso 

^  Peso 

Dime 

^Dime 

Peso 

Peso 

Sucre 

20  Piastres 

2  Markkaa 

5  Marks 

Florin 

Gourde 

Rupee 

5  Sen 

5  Francs 

2      "       

1  "       

50  Centimes 

20        "  

5  Centavo 

Florin 

Sol.... 

500  Reis 

5  Leii 

Rouble  (prior  to  i 

2  Crowns 

5  Dinars 

5  Pesetas 

20  Piastres 

>;  Bolivars 


800  900 

517  900 

800  900 

5i6|9i6§ 

323,835 

800 ;  900 

450 1 900 
900  900 
580  83s 
29083s 

800  900 
800  900 

.800  900 

■o9fJ833s 
952  868 
6661900 
535'925 
800  j  900 
000  9163 

,8001900 
800  900 
323  835 
160,835 
580835 
432  835 


902.7 
945 


323 


900 
91 6§ 
900 

920  868.05 

480  800 


385- 


800  900 
800J900 


,216  830 
,800  900 


cS  S  So 


oJ==^  = 
".-^-T  o 

^-o  C  J. 


347.220 
171.465 
347.220 

36°- 723 
128.857 

347.220 

86.805 
173.610 
32.214 

16.107 

347.220 
347.220 

347.220 
360.080 

138.836 
385.800 
161.445 
347.220 

165.000 

18.720 

347.220 

128.857 

64.42S 
32.214 
12.886 

18.859 
145.832 

347.220 
176.825 
347.220 
277.706 
185.184 


347.220 
347.220 

308.104 

347.220 


935 
462 

935 
972 
347 
935 
234 
468 
087 
043 

935 
935 

935 

970 
374 
039 
435 
935 
444 
051 
935 
347 
174 
0S7 
035 

051 
393 

935 
476 
935 
748 
499 


•935 
•935 

.830 
•935 


238  TAXATION  AND    WORK. 

There  are  480  grains  in  a  troy  ounce.  There  are 
371.2514  grains  of  silver  in  a  silver  dollar.  Therefore,  in 
order  that  a  silver  dollar  may  be  worth  as  much  after  it 
is  melted  as  it  purports  to  be  worth  in  the  coined  dollar, 
the  price  of  bullion  in  New  York  must  be  a  fraction 
over  $1.29  per  ounce.  Fine  silver  bars  are  now  worth 
88  to  90  cents  per  ounce.  In  other  words,  they  are 
at  a  discount  of  thirty  per  cent.,  and  the  true  value  of 
the  silver  dollar  at  the  present  standard  is  substantially 
seventy  cents  ;  it  has  recently  been  worth  less. 

The  prices  of  all  our  principal  products  are  now  on  a 
gold  basis.  We  get  one  hundred  cents'  worth  of  gold  or 
its  equivalent  for  each  dollar's  worth  of  cotton,  corn, 
wheat,  pork,  butter,  or  other  goods  that  we  export  ;  our 
whole  internal  traffic  is  on  the  same  basis  and  is  measured 
at  the  same  standard. 

The  rates  of  wages  and  the  incomes  of  all  our  people  are 
now  on  a  gold  basis,  liquidated  in  money  worth  one 
hundred  cents  on  each  dollar. 

The  only  effect  of  debasing  our  standard  to  silver  worth 
seventy  cents  on  a  dollar  will  be  to  lower  wages  by 
destroying  credit. 

The  advocates  of  the  free  coinage  of  silver  dollars  of 
full  legal  tender  have  the  audacity  to  say  that  an  act  for 
the  free  coinage  of  silver  will  bring  the  silver  bullion  and 
the  silver  coin  of  the  world  up  to  par  in  gold.  They 
undertake  to  say  that  the  United  States  can  raise  the 
value  of  silver  from  seventy  cents,  where  it  now  is,  to  one 
hundred  cents  in  gold,  an  advance  of  a  fraction  less  than 
forty-three  per  cent.  This  claim  only  needs  to  be  stated 
in  order  that  its  absurdity  may  be  made  conspicuous. 
The  power  of  the  United  States  to  promote  the  cir- 
culation of  silver  certificates  convertible  into  gold  is 
already  exhausted.     Silver  bullion  is  now  uselessly  piling 


TAXATION  BY  BAD  MONEY.  239 

up  in  the  Treasury  at  the  cost  of  the  tax-payers  of  this 
country. 

The  people  of  this  country  are  now  paying  a  tax  in 
gold  of  $4,000,000  per  month,  or  $48,000,000  a  year,  for 
the  purchase  of  silver  bullion  that  nobody  wants  to  use 
as  money  either  in  coin  or  in  certificates. 

When  the  legal-tender  notes  of  the  United  States  first 
depreciated,  the  depreciation  being  shown  by  what  was 
called  the  premium  on  gold,  gold  vanished  from  circula- 
tion and  was  hoarded  or  exported  on  the  very  day  the 
premium  reached  even  one  per  cent.  When  the  so-called 
premium  on  gold  reached  a  little  higher  rate,  so  that  our 
subsidiary  silver  coin  became  worth  more  than  the  paper 
currency,  the  whole  of  our  silver  coin  vanished  and  was 
seen  no  more  for  many  years.  As  we  moved  on  in  1878 
toward  resumption  on  a  gold  basis,  January  i,  1879,  ^^ 
silver  coin  first  re-appeared  and  the  gold  next  came  back 
into  the  vaults  of  the  Treasury  and  of  the  banks.  No  one 
could  trace  the  silver  and  only  a  part  of  the  gold  in  the 
statistics  of  the  export  and  import  of  the  precious  metals. 

A  difference  of  a  fraction  of  one  per  cent,  turns  the 
tide  of  gold  from  one  country  to  another.  What  would 
be  the  effect  on  silver  when  we  offer  to  coin  it  at  forty 
per  cent,  profit  ? 

Our  gold  coin  can  be  converted  into  sovereigns  at  the 
rate  of  $4.8666  to  one  sovereign.  The  sovereign  is  the 
coin  which  corresponds  to  the  pound  sterling,  the  pound 
sterling  is  the  standard  of  international  commerce.  If 
the  free  coinage  of  silver  dollars  of  full  legal  tender  were 
granted,  any  foreign  banker  could  now  purchase  silver 
enough  to  make  $4.86  for  less  than  three  dollars  and  a 
half  in  gold.  This  conversion  would  be  at  work  at  once. 
These  dollars  would  then  be  paid  out  in  this  country  as  a 
full  legal  tender  on  all  contracts  for  cotton,  wheat,  pro- 


240  TAXATION  AND    WORK. 

visions,  and  other  goods.  Gold  would  be  drawn  out  from 
the  Treasury  and  from  our  banks  to  be  shipped  to  Eng- 
land. The  shock  to  credit  would  stop  trade,  except  for 
daily  necessities  of  life.  The  bankers  who  deal  in  ex- 
change would  make  immense  profits  on  the  import  and 
conversion  of  silver  into  dollars,  and  the  stupid  people 
would  suffer  the  cost.  People  are  slow,  but  not  so  stupid 
as  they  seem.     This  nefarious  act  cannot  be  done. 

The  advocates  of  the  free  coinage  of  silver  dollars  of 
full  legal  tender  at  the  present  time  are  trying  to  induce 
the  people  of  this  country  to  offer  one  hundred  cents' 
worth  of  gold,  or  of  our  cotton,  grain,  meats,  provisions, 
oil,  and  other  products  now  worth  one  hundred  cents  in 
gold  at  present  prices,  for  the  whole  volume  of  silver  coin 
or  bullion  in  the  world  which  is  now  worth  but  seventy 
cents  in  gold.  This  would  give  forty  per  cent,  profit  to 
the  dealers  in  silver  bullion. 

The  figures  which  I  have  given  prove  this,  and  no  man 
capable  of  reasoning  can  deny  it.  It  is  beyond  the  power 
of  the  silver  Senators  and  Representatives  to  disprove 
this  statement. 

The  Republican  Senators  and  Representatives  of  the 
silver-mining  States  now  demand  that  the  West  and  the 
South  shall  take  seventy  cents'  worth  of  silver  instead  of 
one  hundred  cents'  worth  of  gold  for  their  cotton  and 
their  grain  in  order  to  enable  the  silver  miners  to  sell 
their  little  petty  product  of  silver  for  more  than  it  is 
worth.  The  Democratic  Senators  of  the  South  and  West 
with  few  exceptions  have  nibbled  at  this  bait,  but  the 
trap  has  not  yet  been  sprung. 

The  trick  is  exposed,  and  the  masses  of  the  people  who 
would  pay  the  terrible  cost  of  this  nefarious  measure 
have  warned  their  representatives  that  this  fraud  must 
not  be  put  upon  them. 


I 


TAXATION  BY  BAD  MONEY.  24 1 

No  coined  money  is  true  money  and  no  coined  stand- 
ard can  be  a  true  standard  or  unit  of  value  of  which  the 
bulHon  is  not  worth  as  much  after  it  is  melted  as  it  pur- 
ports to  be  worth  in  the  coin. 

The  silver  dollar  of  the  present  standard  is  bad  money; 
it  is  a  false  standard  because  it  does  not  meet  these  con- 
ditions. Its  coinage  must  cease  and  the  purchase  of  sil- 
ver bullion  must  be  stopped.  This  verdict  has  been 
rendered,  and  either  this  or  the  next  Congress  will  enforce 
the  decision  by  suitable  legislation. 

The  Bland  act  and  the  McKinley  act  have  been  alike 

condemned, — neither   has  any  intellectual    standing  nor 

any  intelligent    support.      Both  are  marked  alike   by  a 

perversion  of  the  power  of  taxation  to  purposes  of  private 

gain  in  total  disregard  of  the  public  welfare. 
16 


CHAPTER  XXIX. 
How  TO  Maintain  Silver  Equal  to  Gold. 

I  HAD  intended  to  close  this  series  with  Chapter 
XXVni.  ;  but  I  venture  to  add  number  XXIX.,  for  the 
purpose  of  submitting  a  suggestion  made  by  Mr.  Chauncey 
Smith,  whose  close  study  of  these  subjects  gives  great 
weight  to  his  conclusions.  Chapters  XXX.  and  XXXI., 
concluding  this  series,  will  summarize  our  present  position 
on  the  tariff  question. 

It  is  admitted  by  all  the  advocates  of  the  bi-metallic 
theory,  and  even  by  all  the  advocates  of  the  free  coinage 
of  silver  of  full  legal  tender  who  are  not  themselves  per- 
sonally interested  in  silver  mining,  that  the  only  element 
which  is  absolutely  necessary  to  the  unit  of  value  or 
standard  of  lawful  money  by  which  all  contracts  are  liqui- 
dated is  stability  or  uniformity  of  valuation  year  by  year, 
decade  by  decade,  and,  so  far  as  it  is  within  the  power  of 
human  foresight,  to  assure  it,  generation  by  generation. 

It  is  urged,  and  indeed  it'is  believed  by  many  persons, 
that  gold  has  become  relatively  scarce  and  has  appreciated. 
It  is  therefore  held  to  be  insufificient  in  quantity  to  meet 
the  conditions  of  a  lawful  standard  or  unit  of  value.  It  is 
held  that  silver  must  be  coined,  and  must  be  kept  at  a 
parity  with  gold,  in  order  that  there  may  be  a  sufficient 
quantity  of  coined  money  both  of  gold  and  silver  to  meet 
the  demands  of  the  world  for  the  use  of  coin.  The  main 
problem  is  how  to  maintain  the  parity  of  silver  with  gold 

242 


ffOW   TO  MAINTAIN  SILVER  EQUAL    TO   GOLD.      243 

and  how  to  keep  it  in  circulation  without  incurring  the 
danger  of  demonetizing  gold  and  throwing  the  whole 
work  upon  silv^er  only.  It  may  have  remained  for  my 
sagacious  friend  to  solve  this  question  in  a  very  simple 
manner,  one  which  would  be  manifestly  right  and  just  and 
to  which  no  one  can  take  exception  whose  purpose  is  not 
to  depreciate  the  standard  or  unit  of  value  or  to  force  the 
country  upon  a  single  silver  standard. 

The  purpose  is  to  enable  the  people  of  this  country  to 
avail  themselves  of  our  production  of  silver  as  well  as  of 
gold,  to  convert  that  silver  into  coin,  and  to  maintain  that 
coin  at  par  with  gold. 

There  may  be  one  very  simple,  certain,  and  effective 
method  of  doing  this,  for  which  we  have  an  example  in 
the  experience  of  our  country. 

The  surest  way  to  keep  the  valuation  or  estimation  of 
any  given  article  above  what  it  would  otherwise  be,  is  to 
add  to  its  cost  to  the  consumer  by  taxation.  If  the  tax 
is  one  that  cannot  be  evaded,  if  it  is  assessed  at  a  mod- 
erate rate,  so  as  not  to  promote  fraud,  and  if  it  is  levied 
both  upon  the  import  and  the  domestic  production,  it  will 
eventually  raise  the  cost  and  therefore  the  valuation  of 
that  specific  article  in  the  community  that  consumes  it. 
We  have  an  example  in  the  present  price  of  spirituous 
liquors,  of  which  both  the  import  and  the  domestic  prod- 
uct are  taxed.  When  the  tax  was  first  imposed  at  two 
dollars  per  gallon  it  was  evaded  ;  when  it  was  reduced  it 
was  collected,  and  presently  it  was  advanced  a  little  from 
the  lowest  rate  at  which  it  stood  for  some  time. 

Tobacco  is  another  example  of  an  article  of  which  both 
the  import  and  product  are  taxed,  to  the  end  that  so  far 
as  the  consumers  are  concerned  the  tax  is  added  to  the 
cost  to  the  consumer  and  the  price  is  based  upon  the  cost 
of  production,  the  profits  to  the  producer,  and  the  tax. 


244  r^XA  TION  AND    WORK. 

Liquors  and  tobacco  now  yield  a  revenue  equal  to  the  en- 
tire normal  cost  of  the  government,  aside  from  the  interest 
on  the  national  debt,  the  bounties  to  the  sugar  planters, 
and  the  pensions,  and  that  revenue  is  paid  by  consumers 
in  the  higher  price  and  valuation  due  to  taxation. 

The  question  put  by  Mr.  Smith  is  :  "  WJiy  should  not 
silver  be  taxed  in  the  same  way  ?  "  The  standard  by  which 
silver  bullion  is  bought  and  sold  is  its  valuation  in  gold  ; 
the  effort  of  legislation,  sustained  by  both  parties  at  the 
present  time,  is  to  maintain  the  parity  of  our  silver  coin- 
age with  our  gold  coinage.  On  the  other  hand,  the  price 
of  silver  bullion  is  thirty  per  cent,  less  than  the  nominal 
value  of  the  silver  in  the  dollar  when  it  is  converted 
by  coinage  into  silver  dollars.  The  price  being  quoted  in 
cents,  the  gold  dollar  contains  one  hundred  cents'  worth 
of  pure  gold  ;  the  silver  dollar  contains  seventy  cents' 
worth.  These  silver  dollars  have  been  maintained  at  a 
parity  with  gold  coin  down  to  the  present  time  by  limiting 
the  quantity  coined,  and  because  they  can  be  directly  or 
indirectly  converted  into  gold  dollars  through  the  United 
States  Treasury. 

The  free  coinage  of  silver  dollars  of  full  legal  tender 
without  taxation  would  imperil  the  present  standard  or 
unit  of  value,  and  would,  in  the  course  of  time,  prevent 
the  maintenance  of  the  parity  of  our  silver  coin  with  our 
gold  coin  ;  gold  would  then  be  demonetized  and  our  cur- 
rency would  be  contracted  to  a  silver  standard,  thus  de- 
stroying credit,  bringing  about  a  cessation  or  paralysis  of 
trade  and  lowering  rates  of  wages. 

In  the  long  distant  future  the  country  would,  of  course, 
adjust  itself  to  the  single  silver  standard  ;  wholesale  prices 
in  silver  would  rise  rapidly,  retail  prices  would  follow 
slowly  after  stocks  had  become  exhausted,  but  wages 
would  remain  depressed  for  a  very  long  period  and  until 


HOW    TO  MAINTAIN  SILVER  EQUAL    TO   GOLD.      245 

full  confidence  and  enterprise  had  been  restored  so  far  as 
they  might  be  on  a  single  fluctuating  silver  standard. 

This  danger  may  be  wholly  avoided  if  there  is  merit  in 
the  suggestion  offered  by  Mr.  Smith  ;  to  wit,  to  tax  both 
the  import  and  product  of  silver  in  a  snni  that  would  repre- 
sent the  exact  difference  between  the  value  of  silver  bullion 
in  its  ratio  to  gold. 

This  method,  if  it  could  be  framed  in  practical  legisla- 
tion, would  be  beneficial  to  all  parties.  Only  that  propor- 
tion of  silver  ore  would  be  taken  out  of  the  ground  to  be 
smelted  and  converted  into  coin  that  would  be  required 
for  use  in  that  form  at  the  cost  of  production  with  the 
tax  added.  Of  course,  other  supplies  of  ore  or  of  silver 
bullion  would  be  required  for  use  in  the  arts,  but  so  far  as 
the  monetary  use  of  silver  in  our  country  is  concerned  the 
supply  would  be  limited  to  the  demand  that  would  ensue 
for  bullion  at  cost  subject  to  the  tax. 

If  it  were  proved  by  the  ofYer  of  free  coinage  of  taxed 
silver  that  there  was  no  deficiency  of  gold  and  that  silver 
coin  under  these  conditions  was  not  required,  then  the 
silver  ore  would  remain  as  a  reserve  store  in  the  ground 
to  meet  future  needs  and  to  be  drawn  upon  only  so  fast 
as  it  might  be  required  for  use  in  the  arts.  If  free  coinage 
raised  the  price,  then  the  tax  would  be  correspondingly 
reduced. 

It  may  be  objected  that  there  is  a  large  foreign  demand 
for  silver  at  the  present  low  cost  of  production  and  low, 
price.  That  demand,  however,  may  be  very  easily  met 
by  a  drawback  of  ninety-nine  per  cent,  on  the  tax  or  duty 
if  any  silver  had  been  imported  ;  in  this  respect  copying  the 
provisions  of  the  law  upon  tin-plates  upon  which  a  draw- 
back is  allowed  upon  exports  ;  silver  bullion  mined  within 
our  own  limits  could  also  be  exported  in  bond  free  of 
taxation,  as  whiskey  is. 


246  TVfX^  TIOiV  AND    WORK, 

In  this  way  our  mines  would  continue  to  be  worked  for 
the  full  supply  of  all  the  silver  that  the  world  requires, 
while  the  danger  of  imperilling  the  stability  of  our  own 
currency  would  be  avoided  by  keeping  the  domestic  price 
of  bullion  always  at  a  certain  ratio  to  gold  by  varying  the 
price  according  to  the  price  of  untaxed  bullion. 

It  may  be  objected  that  the  price  of  silver  varies,  but  in 
dealing  with  other  questions  the  country  has  become 
habituated  to  granting  discretion  to  the  Secretary  of  the 
Treasury.  Under  the  present  law  the  only  imperative 
rule  is  that  he  shall  buy  so  many  ounces  of  silver  bullion 
each  month  without  regard  to  the  price  ;  this  leaves  to 
his  discretion  all  negotiations  for  fixing  the  price  at  the 
time  of  each  purchase. 

A  tax  might  be  imposed  on  silver  subject  to  variation, 
month  by  month,  according  to  the  market  price  of  silver 
bullion.  A  very  simple  computation  could  be  made  at 
the  beginning  of  each  month  for  an  adjustment  of  the 
tax  to  the  exact  difference  between  the  market  price  of 
the  bullion  and  the  unit  of  value  which  it  is  the  intention 
to  maintain  unimpaired. 

This  would  be  a  perfectly  suitable,  effective,  and  just 
method  of  maintaining  the  parity  of  silver  and  gold  in  our 
currency  ;  it  would  prevent  the  waste  of  silver  ore  from 
our  mines,  while  at  the  same  time  enabling  the  owners  of 
the  mines  to  supply  all  other  nations  free  from  taxation. 

In  the  matter  of  the  adjustment  of  the  rate  of  taxation 
we  all  have  an  example  in  the  present  tariff  of  duties  on 
other  imports  than  those  of  silver.  The  declared  purpose 
of  the  present  tariff  and  the  declared  purpose  of  the  Re- 
publican party  is  to  put  exactly  that  measure  of  taxation 
upon  foreign  imports  that  will  represent  the  difference  in 
the  labor  cost  of  each  product  in  other  countries  as  com- 
pared to  the  labor  cost  of  the  same  commodity  in  this 


HOW   TO  MAINTAIN   SILVER  EQUAL    TO   GOLD.      247 

country.     That,  indeed,  is  a  very  complex  matter,  but 
Congress  has  undertaken  it. 

Where  it  would  be  impossible  to  vary  a  tax  according 
to  the  cost  of  silver,  the  tax  may  be  readily  adjusted  ac- 
cording to  the  price.  No  one  knows  what  the  labor  cost 
of  the  production  of  silver  is  except  those  who  work  the 
mines  and  smelting  works,  and  they  keep  their  own 
councils. 

It  varies,  of  course,  from  a  low  cost  to  a  cost  very  much 
above  its  gold  value.  But  the  price  of  silver  bullion  can 
be  determined  every  day,  and  it  would  be  wholly  within 
the  power  of  the  government  to  vary  the  tax  every  day  if 
that  were  expedient.  It  would  be  sufficient,  however,  to 
vary  it  only  once  for  a  considerable  period,  for  the  reason 
that  if  the  price  of  bullion  should  rise,  then  the  tax  would 
fall,  and  then  silver  that  had  been  coined  at  a  higher  cost 
under  the  imposition  of  a  higher  tax  would  be  worth  more 
than  its  face  value,  and  would  disappear  from  circulation, 
as  our  silver  dollars  disappeared  from  circulation  prior  to 
1873,  because  they  were  worth  more  as  buUion  than  as 
coin. 

In  fact  this  provision,  if  carried  out,  would  bring  into 
effect  a  perfectly  simple  method  of  maintaining  the  parity 
of  silver  and  gold  in  our  coinage  without  enabling  the 
owners  of  the  silver  mines  to  put  their  product  upon  the 
government  for  more  than  it  is  worth.  It  offers  a  method 
of  coining  money  and  regulating  the  value  thereof  con- 
sistently with  the  terms  of  the  Constitution,  to  which  no 
exception  can  be  taken  except  by  those  who  desire  to 
deprave  our  monetary  system  for  nefarious  or  purely 
selfish  purposes. 

The  very  simplicity  of  this  suggestion  will  carry  convic- 
tion of  its  being  a  true  method  to  all  persons  who  do  not 
want  to  run  the  risk  of  depreciating  the  unit   of    value 


248  TAXA  TIOM  AND    WORK. 

either  in  order  to  sell  silver  for  more  than  it  is  worth  or  in 
order  to  pay  debts  for  less  than  the  amount  agreed.  For 
example,  in  order  that  the  silver  bullion  in  the  silver  dollar 
of  the  present  standard  shall  be  equal  in  value  to  what  it 
purports  to  be  in  the  dollar,  the  market  price  of  fine  silver 
must  be  one  dollar  and  twenty-nine  cents  per  ounce.  In 
other  words,  in  order  that  the  silver  dollar  may  be  worth 
as  much  after  it  is  melted  as  it  purports  to  be  worth  in  the 
coin,  the  fine  silver  in  it  must  sell  at  a  fraction  over  one 
dollar  and  twenty-nine  cents  per  ounce. 

We  will  assume  that  on  a  given  day  after  the  enactment 
of  the  law  under  which  the  Secretary  of  the  Treasury  is  to 
determine  what  the  rate  of  the  tax  will  be  for  a  given 
period,  the  value  of  the  silver  bullion  free  from  tax  is 
eighty-nine  cents  per  ounce.  The  difference  between  that 
and  a  valuation  which  keeps  it  at  a  parity  with  gold,  to 
wit,  one  dollar  and  twenty-nine  cents,  is  forty  cents  per 
ounce.  Divide  eighty-nine  into  forty,  and  we  have  the 
true  ratio  of  the  tax,  namely,  forty-five  per  cent.;  89  cents 
-f-45  per  cent.  =  $1.29  per  ounce. 

We  will  assume  that  the  coinage  is  free,  and  that  any 
owner  of  a  silver  mine  may  bring  bullion  to  be  coined  ;  we 
do  not  ask  him  what  it  may  have  cost  him  ;  he  is  offered 
free  coinage  into  dollars  with  which  he  can  pay  his  debts 
and  his  wages  subject  to  the  true  rate  of  taxation.  The 
bullion  worth  eighty-nine  cents  per  ounce  is  subjected  to 
a  tax  of  forty-five  per  cent.,  which  he  pays ;  that  is  to  say^ 
forty-five  per  cent,  of  eighty-nine  cents  is  forty  cents  ;  this 
tax  forms  a  part  of  the  cost  of  silver  dollars,  as  all  taxes 
are  customarily  added  to  the  price.  The  addition  of  the 
tax  carries  the  price  or  valuation  of  the  bullion  up  to  one 
dollar  and  twenty-nine  cents  per  ounce.  That  is  exactly 
where  it  should  be  in  order  to  maintain  the  parity  of  the 
silver  dollar  with  the  gold  dollar. 


HOW   TO  MAINTAIN-  SILVER  EQUAL    TO   GOLD.      249 

No  injustice  is  done  to  any  one;  the  government  gets  a 
revenue,  coinage  is  free,  the  unit  of  value  is  maintained, 
and  if  silver  is  to  be  exported,  it  is  exported  under  a 
drawback,  which  will  enable  the  owners  to  secure  its  full 
bullion  value  in  all  other  markets  without  bringing  disaster 
or  disorder  into  the  monetary  system  of  his  own  country. 

This  suggestion  may  perhaps  be  rightly  acted  upon 
while  the  subject  of  the  free  coinage  of  silver  is  pending, 
even  in  the  present  Congress. 


CHAPTER  XXX. 

The  Issue  Joined. 

Since  the  last  chapter  upon  Taxation  and  Work  was 
written,  the  nominating  convention  of  the  Democratic 
party  has  been  held.  The  division  upon  the  silver  ques- 
tion is  not  a  party  division.  The  advocates  of  the  free 
coinage  of  silver  without  the  concurrent  action  of  foreign 
nations  are  only  a  small  faction  in  each  party,  and  their 
day  of  temporary  influence  has  gone  from  them.  The 
purchase  of  silver  bullion  under  present  acts  will  doubt- 
less be  stopped  in  the  second  session  of  the  present  Con- 
gress by  the  repeal  or  amendment  of  what  is  known  as 
the  Sherman  bill.  This  purchase  of  bullion  is  not  sus- 
tained by  Senator  Sherman  himself  or  by  many  of  his 
associates  on  the  Republican  side,  nor  will  it  be  sustained 
by  the  Democrats. 

The  main  issue  in  the  ensuing  election  is  the  tariff 
question.  The  logic  of  events  has  compelled  the  nomi- 
nating convention  of  each  party  to  take  a  position  upon 
this  question  which  it  is  not  probable  that  any  large  num- 
ber of  the  members  of  either  party  would  have  taken  had 
a  free  choice  been  left  to  them. 

The  enactment  of  the  McKinley  Tariff  bill  committed 
the  Republican  party  to  the  policy  of  "  Protection  with 
incidental  revenue  "  against  the  judgment  of  its  best- 
informed  members.  This  act  was  framed  under  the 
direction  of  its  sponsor,  Mr.  Wm.  McKinley,  Jr.,  consist- 

250 


THE  ISSUE  JOINED.  2$ I 

ently  with  his  theory  of  the  purpose  of  a  tariff,  which  is 
to  secure  "  Protection  with  incidental  revenue."  When 
the  Repubhcan  party  first  subjected  itself  to  the  demands 
of  the  representatives  of  special  branches  of  industry  for 
the  enactment  of  special  schedules  framed  for  the  pur- 
pose of  excluding  foreign  fabrics  of  the  kinds  made  by 
themselves,  by  putting  constantly  increasing  duties  upon 
them  without  regard  to  revenue,  the  party  placed  itself 
under  the  necessity  of  continuing  upon  that  line  of  policy 
to  the  end.  It  deprived  itself  of  free  choice,  because  to 
yield  at  any  point  would  be  to  give  up  the  fundamental 
idea  upon  which  the  McKinley  act  is  based.  The  framers 
of  the  Republican  platform  had  no  choice  in  the  matter, 
although  this  dogma  of  prohibition  of  imports  for  the 
benefit  of  certain  classes  is  offensive  to  the  largest  and 
most  intelligent  portion  of  the  members  of  the  party. 
The  declaration  in  the  Republican  platform  is  as  follows : 
"  We  maintain  that  the  prosperous  condition  of  onr  country 
is  largely  due  to  the  wise  revenue  legislation  of  the  Repub- 
lican Congress.  We  believe  that  all  articles  that  cannot  be 
produced  in  the  United  States,  except  luxuries,  should  be 
admitted  free  of  djity,  and  that  on  all  imports  coming  into 
competition  with  the  products  of  American  labor  there 
should  be  levied  duties  equal  to  the  difference  between  wages 
abroad  and  at  home.'' 

It  will  be  observed  that  the  question  of  revenue  is 
wholly  ignored  in  this  declaration.  Articles  which  in  the 
judgment  of  Congress  cannot  be  produced  to  advantage 
in  this  country,  except  luxuries,  are  to  be  admitted  free 
of  duty.  Articles  which  in  the  judgment  of  Congress 
can  be  produced  to  advantage  in  this  country  are  to  be 
subjected  to  such  high  rates  of  duty  as  to  stop  the  im- 
port. Articles  like  sugar,  which  could  be  produced  in 
this  country,  but  which   Congress  has  chosen   to  make 


252  TAX  A  no  AT  A  ND    WORK. 

free  of  duty,  are  to  be  made  the  subjects  of  a  bounty  at 
the  cost  of  the  tax-payers. 

The  enforcement  of  this  poHcy  would  lead  to  the  neces- 
sity of  direct  taxation  or  to  the  imposition  of  an  income 
tax,  in  order  to  secure  the  necessary  revenue  which  may 
not  be  derived  from  the  excise  taxes  on  liquors  and 
tobacco. 

I  have  shown  that  if  the  policy  advocated  in  these 
terms  were  actually  applied  to  the  framing  of  a  tariff 
measure,  that  measure  would  bring  about  a  greater  reduc- 
tion in  the  rates  of  duties  that  are  imposed  now  under 
the  McKinley  act  than  has  yet  been  proposed  by  any 
Democrat,  because,  in  point  of  fact,  there  is  not  a  duty 
imposed  under  the  McKinley  act  on  any  article  of  any 
considerable  importance  which  is  not  very  much  greater 
than  the  difference  between  wages  at  home  and  abroad, 
even  if  the  cost  of  labor  corresponded  to  that  difference 
in  the  rate  of  wages,  which  it  does  not.  The  very  form 
of  this  resolution  proves  conclusively  that  the  McKinley 
version  of  the  protective  policy  is  intellectually  dead. 
No  person  of  ordinary  intelligence  who  possesses  even  a 
superficial  knowledge  of  the  facts  governing  the  produc- 
tion of  the  goods  which  are  imported  in  the  crude  or 
partly  manufactured  condition,  or  of  the  useful  fabrics 
which  constitute  the  larger  part  of  the  finished  manufac- 
tures, would  have  ventured  to  frame  a  resolution  which 
can  be  so  completely  turned  against  the  intention  of  those 
who  framed  it.  Nine-tenths  or  more  of  all  the  articles 
consumed  in  this  country  are  made  at  less  cost  for  labor 
than  in  any  other  country,  whatever  the  rates  of  wages 
may  be.  A  very  large  portion  of  the  imports  from  other 
countries  come  from  countries  which  possess  advantages 
in  other  respects  than  the  cost  of  labor ;  hence  although 
their  rates  of  wages  may  be  lower  and  their  labor  cost 


The  issue  joined.  253 

may  be  more  or  may  be  less  than  it  is  with  us,  yet  there 
is  an  advantage  to  them  in  selHng  their  products  to  us, 
and  there  is  an  advantage  to  us  in  buying  them. 

Only  persons  who  are  wholly  ignorant  of  the  facts  which 
govern  commerce  could  have  been  imposed  upon  by  the 
representatives  of  wool,  pig-iron,  and  silver,  who  make  use 
of  the  Republican  party  in  order  to  secure  special  legisla- 
tion at  the  cost  of  the  masses  for  the  benefit  of  the  classes, 
in  whose  interest  such  resolutions  and  such  acts  as  the 
McKinley  tariff  have  been  framed. 

It  is  not,  however,  the  purpose  of  the  framers  of  this 
resolution  to  make  any  reduction  in  the  tariff  correspond- 
ing to  its  true  construction,  nor  would  they  admit  that 
this  plank  in  the  platform  is  subject  to  the  construction 
that  I  have  given  it.  We  must  look  to  the  more  intel- 
ligent and  thinking  portion  of  the  Republican  party  to 
find  out  what  its  leaders  really  mean. 

The  party  has  committed  itself  through  the  law  officers 
of  the  Republican  administration  to  a  specific  declaration 
of  its  purposes.  It  has  given  a  clear  and  definite  meaning 
to  the  policy  which  it  advocates  under  the  name  of  "  The 
Principle  of  Protection." 

At  the  risk  of  repetition  we  must  again  refer  to  the 
briefs  which  were  submitted  to  the  Supreme  Court  of  the 
United  States  in  support  of  the  McKinley  tariff  and  of 
the  bounty  to  the  sugar-planters  incorporated  in  the  terms 
of  that  act.  The  official  construction  of  the  act  and  the 
declaration  of  the  real  purpose  of  the  party  are  given  in 
terms  that  admit  of  no  evasion,  by  able  advocates  fully 
conscious  of  the  necessity  of  presenting  their  case  in  the 
clearest  and  plainest  terms. 

The  following  extracts  from  these  briefs  submitted  by 
Hon.  W.  H.  H.  Miller,  Attorney-General  of  the  United 
States  and  by   Hon.  William   H.  Taft,  Solicitor-General, 


254  TAXA  TION  AND    WORK. 

should  be  substituted  for  the  plank  in  the  Republican 
platform  in  every  discussion  in  the  ensuing  campaign.  In 
fact,  this  entire  brief  in  full  should  be  reprinted  for  the 
information  of  the  voters.  The  following  extracts  give 
the  gist  of  the  arguments  : 

"  The  sugar-bounty  clause  was  for  the  purpose  of  encouraging  the  pro- 
duction of  raw  sugar  in  this  country. 

"  The  sugar  bounty  is  to  be  paid  from  the  Treasury  of  the  United  States, 
and,  therefore,  out  of  the  general  revenues  of  which  the  collections  under 
this  act  will  form  a  large  part.     .     .     ." 

Referring  to  the  increase  of  duties  on  silks,  woollens,  and 
cottons,  it  is  held  in  this  brief  that 

"  The  increase  of  the  duties  on  those  articles  was  not  made  for  the  pur- 
pose of  increasing  the  revenue.  The  higher  rates  were  imposed  to  give  a 
better  protection  to  the  manufacture  of  such  merchandise  in  this  country. 
They  were  made  with  a  view  to  decrease  the  importations,  and  with  the 
prospect  that  the  revenues  would  be  thereby  reduced. 

"  It  may  be  conceded  that  the  bounty  must  be  paid  out  of  the  Treasury 
of  the  United  States  from  funds  raised  by  taxation,  and  therefore  that,  unless 
Congress  has  power  to  levy  a  tax  for  the  purpose  of  paying  the  bounty,  an 
appropriation  for  a  bounty  is  beyond  its  power.     .     .     ." 

After  citing  certain  authorities,  it  is  held  as  follows : 

"  Congress  has  power,  therefore,  to  levy  duties  for  the  purpose  of  pro- 
viding for  the  general  welfare  of  the  United  States.  Is  the  provision  for  the 
payment  of  bounty  to  sugar  producers,  above  set  forth,  '  for  the  general  wel- 
fare'? Appellants'  counsel  contend  that  it  is  not,  because  it  is  primarily  for 
the  aid  of  private  individuals  and  only  remotely  for  a  public  purpose,  and 
therefore  not  for  the  general  welfare." 

"  It  has  been  held  in  a  number  of  cases,  upon  which  appellants'  counsel 
rely,  both  in  this  court  and  in  the  courts  of  the  various  States,  that  taxation 
must  be  for  a  public  purpose,  and  therefore  that,  where  it  is  proposed  by  a 
municipal  corporation  to  pay  money  or  lend  credit  to  a  private  individual  or 
company  as  an  inducement  to  the  construction  of  works  within  the  limits  of 
the  municipal  corporation,  the  remote  consequences  of  benefit  to  the  people 
of  that  corporation  are  not  sufficient  to  make  the  purpose  of  the  donation  a 
public  one,  and  laws  authorizing  the  same  are  void.     The  leading  case  upon 


THE  ISSUE  JOINED.  255 

this  subject  is  Loan  Association  versus  Topeka  (20  Wall.,  655),  where  it  was 
held  that  bonds  issued  by  a  city  to  pay  a  bonus  to  a  manufacturing  corporation 
to  build  its  plant  within  that  city  were  invalid  and  beyond  the  power  of  that 
city,  even  though  expressly  authorized  by  the  legislature.  Other  cases  to 
the  same  effect  are  numerous." 

Reference  being  made  to  the  other  cases,  the  argument 
in  this  brief  proceeds  as  follows  : 

"  The  foregoing  do  not  include  all  the  cases  on  the  subject,  but  they  are 
sufficient  to  show  the  principle  which  the  appellants  here  invoke  to  invalidate 
the  bounty  clause  under  consideration.  We  respectfully  submit  that  they 
have  no  application  to  this  controversy.  It  is  obvious  that  the  establishment 
of  a  particular  industry  in  one  place  by  a  bonus  to  specified  private  in- 
dividuals is  a  very  different  object  for  taxation  than  the  encouragement  by 
the  National  Government  of  a  widespread  industry  in  many  quarters  of  the 
Union  for  national  purposes,  with  a  view  to  diversifying  the  industries  of  the 
country  and  making  it  independent  of  other  countries  for  necessities.  .  .  ." 
"  The  principle  was  laid  down  in  the  case  of  Lowell  vs.  Boston,  stipra, 
that  a  purpose  was  not  a  public  purpose  because,  by  affecting  the  private 
interest  of  a  great  many  individuals,  it  would  ultimately  affect  the  public 
weal.  With  respect  to  municipalities  and  States,  that  can  have  no  inter- 
national relations,  this  is  undoubtedly  true,  but  the  subject  assumes  a  very 
different  aspect  when  treated  from  the  standpoint  of  the  collective  industries 
of  a  nation  in  competition  with  and  in  relation  to  the  industries  of  other 
nations.  .  .  .  Such  national  action  is  required  to  offset  the  encouragement 
of  the  same  industries  in  other  countries,  lest  thereby  we  may  be  made  alto- 
gether dependent  for  the  supply  of  a  necessity  upon  countries  thus  far 
removed." 

Citing  Chief-Justice  Marshall's  decision  in  the  case  of 
McCullough  vs.  the  State  of  Maryland,  where  the  power 
of  Congress  to  incorporate  a  bank  was  under  discussion, 
the  argument  of  the  officers  of  the  government  proceeded 
as  follows  : 

"  The  principle  thus  established  necessarily  justifies  bounties,  for,  in  the 
beginning  of  the  operation  of  a  protective  tariff,  the  amount  of  duty  levied 
is  a  bounty  to  the  domestic  manufacturer  and  it  is  with  a  view  to  such  a 
benefit  for  him  that  it  is  levied.  The  sugar  duties  have  always  had  the 
effect  of  a  bounty  to  domestic  sugar  producers.     .     .     .     The  question  of 


256  TAX  A  TION-  AND   WORK. 

the  validity  of  bounties  is  therefore  as  old  as  that  of  a  protective  tariff  and 
has  been  answered  in  the  same  way  by  constant  legislative  and  executive 
action,  in  accordance  with  the  views  of  that  ablest  of  statesmen  and  jurists 
who  penned  the  Report  on  Manufactures.  .  .  .  If  a  century's  construc- 
tion of  the  Constitution  by  Congress  is  binding  on  the  courts,  then  the 
question  of  the  power  to  tax  for  a  bounty  to  particular  industries  is  no  longer 
an  open  one. 

"A  course  of  legislation  and  an  acquiescence  of  the  people  as  old  as  the 
nation  itself  has  sanctioned  both  direct  and  indirect  bounties  for  the  encourage- 
ment of  those  industries  which  are  closely  allied  with  national  growth  and 
national  indei^endence,  as  a  public  purpose  and  as  within  the  power  of 
Congress. 

"  We  have  been  discussing  heretofore  the  validity  of  the  bounty  features 
of  the  sugar  clause  on  the  theory  that  provision  of  this  sort  was  for  the 
general  welfare.  There  is  another  ground  upon  which  it  can  be  supported. 
All  the  authorities  agree  that  the  government  may  recognize  a  moral  obliga- 
tion to  any  class  of  citizens  by  direct  appropriation,  though  the  claim  is  not 
based  on  strictly  legal  grounds.     .     .     . 

"  Here  was  a  case  where  citizens,  by  reason  of  heavy  sugar  duties  which 
had  existed  for  many  years  had  been  induced  to  make  large  investments  in 
the  plant  required  for  the  production  of  sugars  ;  and  now  it  was  proposed 
by  Congress  to  remove  the  duties  because  the  revenue  which  they  pro- 
duced was  more  than  sufficient  for  the  use  of  the  government.  The  removal 
of  duties  would  absolutely  destroy  fifty  or  sixty  million  dollars'  worth  of 
property  invested  in  this  industry  and  protected  by  the  duties.  To  enable 
persons  whose  property  would  be  thus  injuriously  affected  to  prepare  for  the 
change,  the  government  was  under  a  moral  obligation  to  reimburse  them  for 
their  loss  or  to  permit  them  by  a  bounty  to  continue  the  business  until  such 
time  as  the  business  might  be  self-sustaining." 

In  this  declaration  of  the  law  officers  of  the  Republican 
Administration  all  the  rubbish  is  swept  away  about 
putting  our  taxes  upon  others, — every  assertion  that  the 
tariff  is  not  a  tax, — and  every  suggestion  that  its  purpose 
is  not  to  create  a  bounty  for  favored  classes  out  of  the 
proceeds  of  taxation  paid  by  the  masses.  The  power  of 
Congress  is  declared  to  be  supreme,  and  the  power  of  the 
Supreme  Court  to  reverse  its  decision  in  the  matter  is 
denied. 

Such  being  the  position  in  which  the  logic  of  the   case 


THE  ISSUE  JOINED.  257 

has  placed  the  Republican  party,  we  may  now  consider  the 
position  of  their  opponents.  The  Committee  on  Reso- 
lutions of  the  Democratic  party  first  framed  such  a  defi- 
nition of  a  tariff  policy  as  it  was  thought  judicious  for  the 
party  to  put  into  its  platform,  but  the  convention  itself 
chose  to  put  aside  all  consideration  of  mere  policy  and 
plant  itself  upon  the  principle  upon  which  the  Democratic 
party  now  stands.  Perhaps  a  majority  of  the  convention 
would  not  have  committed  themselves  so  absolutely, 
except  under  the  excitement  and  enthusiasm  of  the 
moment,  and  they  may  have  "  builded  better  than  they 
knew."  This  declaration  of  a  Democratic  principle  is 
stated  in  the  following  plain  terms : 

"  We  declare  it  to  be  a  fundamental  principle  of  the 
Democratic  party  that  the  Federal  government  has  no 
constitutional  power  to  enforce  and  collect  tariff  duties 
except  for  the  purpose  of  revenue  only,  and  demand  that 
the  collection  of  such  taxes  shall  be  limited  to  the  neces- 
sities of  the  government,  and  honestly  and  economically 
administered." 

The  issue  is  joined.  The  position  of  the  Republican 
party,  through  its  law  ofificers,  has  made  it  evident  that  the 
so-called  "  principle  of  Protection  "  is  a  policy  for  taxing 
the  many  for  the  benefit  of  the  few.  The  Democratic 
party  denounces  this  assertion  of  power,  and  plants  itself 
upon  the  principle  that  all  taxes  that  the  people  pay  the 
government  shall  receive,  and  that  no  moneys  shall  be 
expended  except  for  the  support  of  the  government, 
economically  administered. 

The  Republican  party  denies  that  the  rule  of  law  laid 
down  before  the  Supreme  Court  by  Justice  Miller  should 
control  the  National  as  well  as  the  State  legislatures. 
Justice  Miller  gave  his  ruling  in  the  following  terms  :  "  To 
lay  with  one  hand  the  power  of  the  government  on  the 


258  TAX  A  TION  A  ND    WORK. 

property  of  the  citizen,  and  with  the  other  to  bestow  it 
upon  favored  individuals  to  aid  enterprises  and  build  up 
private  fortunes,  is  none  the  less  robbery  because  it  is  done 
under  the  forms  of  law  and  is  called  taxation.  This  is  not 
legislation.     It  is  a  decree  under  legislative  forms." 

The  real  point  at  issue  is  the  question  whether  or  not 
the  Congress  of  the  United  States  possesses  a  limited  and 
delegated  power,  or  whether  it  is  so  supreme  that  even  the 
highest  court  of  the  land  must  submit  to  its  decrees  with- 
out regard  to  the  merits  of  any  question  that  may  be 
brought  before  it.  The  Republican  party  declares  that 
the  plain  rule  as  laid  down  by  Justice  Miller  in  Loan  Asso- 
ciation vs.  Topeka  has  no  binding  force.  The  Democratic 
party  declares  that  it  is  binding  upon  every  legislature, 
including  the  Congress  of  the  United  States. 

The  Republican  party,  through  its  law  officers,  holds 
that  Congress  may  grant  bounties  at  the  expense  of  its 
tax-payers  to  favored  branches  of  industry,  and  that  when 
the  owners  of  capital  have  invested  their  money  in  that 
industry,  they  thereby  secure  a  vested  interest  in  the  pro- 
ceeds of  taxation,  and  that  the  Congress  of  the  United 
States  is  thereafter  "  under  a  moral  obligation  "  to  tax  the 
people  for  the  support  of  such  private  citizens  or  private 
corporations  until  the  business  that  they  have  undertaken 
becomes  self-sustaining. 

The  Supreme  Court  did  not  rule  upon  this  question  in 
the  McKinley  cases.  It  was  not  brought  directly  before 
the  court,  and  the  court  passed  it  by.  The  case  is  now 
removed  from  the  court  to  the  adjudication  of  the  people 
of  the  United  States.  History  repeats  itself.  The  posi- 
tion of  the  Republican  party  now  corresponds  to  that  of 
the  Whig  party  in  the  ante-war  period,  a  party  which  was 
endowed  with  good  intentions,  but  was  without  convic- 
tions.    As  the  Whig  party  destroyed  itself  by  attempting 


THE   ISSUE  JOINED.  259 

to  compromise  with  slavery,  so  may  its  prototype  destroy 
itself  by  its  readiness  to  compromise  the  monetary  safety 
of  the  country  and  the  interests  of  the  mass  of  the  people 
for  the  sake  of  continuance  in  power. 

The  Democratic  party  of  to-day  finds  its  prototype  in 
the  Republican  party,  as  that  party  was  when  it  was  first 
organized,  a  party  devoted  to  principles.  The  Demo- 
cratic party  has  been  forced  by  the  logic  of  events  to 
ignore  the  partisans  who  have  tried  to  control  it ;  it  has 
become  in  a  true  sense  the  party  of  the  people,  the  ex- 
ponent of  equal  rights,  and  it  has  planted  itself  upon  a 
principle  which  is  impregnable. 

Between  the  two  have  stood  the  Independents,  whose 
prototypes  may  be  found  in  the  Free  Soil  party  of  the 
ante-war  period,  a  party  that  never  elected  a  candidate  to 
any  high  office  and  which  was  represented  in  Congress  by 
a  few  members  only ;  but  they  were  men  whose  courage 
and  convictions  gave  them  a  dominant  power  in  inverse 
proportion  to  their  number,  such  as  the  Independent 
members  of  the  present  Congress  have  exercised. 

The  issue  is  joined.  Taxation  and  Work  are  names  for 
the  same  thing  ;  each  voter  will  soon  be  called  upon  to 
decide  for  what  principle  and  for  what  party  he  will  work 
and  vote. 

The  manifest  tendency  of  right-minded  and  reasonable 
men  of  both  parties  in  the  present  Congress  has  been  to 
take  the  question  of  the  currency  out  from  party  politics. 
This  power  may  soon  be  exerted  so  as  to  take  the  tariff 
question  out  from  party  politics,  so  that  during  the  second 
session  of  the  present  Congress  a  reform  of  the  tariff  may 
be  brought  about  in  a  way  that  will  harm  none,  but  which 
will  do  justice  to  all  by  establishing  true  protection  to  do- 
mestic industry  through  the  exemption  from  unnecessary 
^axation  of  all  the  materials  which  are  required  in  the  pro- 


26o  TAXATION  AND    WORK. 

cesses  of  our  own  domestic  industry,  coupled  with  duties 
for  revenue  on  finished  products,  so  adjusted  as  not  to 
exceed  tlie  difference  in  wages  at  home  and  abroad. 

Unless  this  coalition  and  compromise  are  made  in  the 
present  Congress  at  its  second  session,  so  as  to  prevent  the 
tariff  becoming  the  football  of  mere  politicians,  there  will 
be  great  danger  of  radical  and  revolutionary  changes  in 
our  policy  which  will  provoke  a  reaction  and  endanger  the 
steady  progress  of  a  true  reform  of  our  whole  fiscal 
system. 


CHAPTER  XXXI. 
Personal  Observations — Conclusion. 

It  may  not  be  considered  egotism  if  in  this  concluding 
number  of  the  series  of  thirty-one  essays  upon  "  Taxation 
and  Work  "  I  should  state  the  reasons  why  I  have  put 
the  data  in  this  form,  while  I  may  at  the  same  time  give 
the  motive  of  the  whole  series.  In  one  respect  and  per- 
haps only  one,  the  methods  of  the  British  administration 
and  Parliament  are  better  than  our  own.  The  questions 
which  are  brought  before  Parliament  are  of  two  kinds  ; 
first,  measures  by  which  a  given  administration  will  stand 
or  fall  and  upon  which  divisions  will  be  surely  made  upon 
party  lines.  Second,  measures  which  are  not  distinctly 
party  measures,  but  which  Her  Majesty's  opposition 
shares  with  Her  Majesty's  administration  in  perfecting. 
In  many  cases  measures  of  the  second  class  are  subject 
to  parliamentary  investigation  by  special  committees,  of 
which  the  members  are  selected  purely  with  regard  to 
their  assumed  knowledge  of  the  subject  and  with  very 
little  regard  to  party  lines.  Reports  of  such  committees 
have  become  historic  for  the  exhaustive  thoroughness  with 
which  the  work  has  been  done. 

A  beginning  has  been  made  by  the  present  Senate  of 
the  United  States  in  the  conduct  of  an  exhaustive  exam- 
ination of  this  kind.  Every  one  who  has  become  con- 
versant with  the  methods  that  have  been  adopted  by  the 
members  of  the  Finance  Committee  of  the  Senate  in  the 

261 


262  TAX  A  TION  AND   WORK. 

investigation  of  prices  and  wages  during  the  last  half 
century  and  the  influence  of  tariff  legislation  thereon,  will 
wait  for  that  Report  with  full  assurance  that  through  the 
combined  action  of  the  members  of  that  committee  of 
both  political  parties  an  exhaustive  and  impartial  state- 
ment will  be  made. 

It  has  become  my  good  or  ill  fortune  to  obtain  such  a 
measure  of  authority  in  the  investigation  of  financial 
questions  as  to  have  been  called  upon  very  many  times 
during  the  last  twenty-five  years  to  give  statements  of 
facts,  figures,  and  conclusions  to  the  leading  men  of  both 
political  parties  in  the  House  and  Senate  and  in  executive 
office ;  I  have  also  been  subject  to  a  wide  correspondence, 
of  which  the  requirements  are  somewhat  difficult  to  meet. 
I  have  seldom  been  called  upon  to  change  a  statistical 
statement  or  to  alter  a  conclusion,  and  I  believe  that  I 
have  been  quoted  as  authority  as  often  by  the  advocates 
of  high  tariff  Protection  as  I  have  been  by  the  representa- 
tives of  tariff  reform  or  Free  Trade. 

The  methods  of  the  representatives  of  either  party  in 
this  country,  with  a  few  conspicuous  exceptions,  are  as 
bad  as  the  English  methods  are  good,  keeping  in  view  the 
search  for  the  truth.  Whatever  statement,  or  judgment, 
or  conclusion  is  submitted  on  the  one  side  is  usually  met 
by  a  denial  and  an  attempt  at  refutation  on  the  other. 
Silly  charges  are  bandied  about  by  both  sides.  A  lot  of 
rubbish  about  the  Cobden  Club,  the  Home  Market  Club, 
British  Gold,  and  Protective  Greed  is  sure  to  appear  when- 
ever the  subject  comes  up  in  the  greater  number  of  the 
party  papers,  and  as  surely  as  this  vituperative  method 
appears,  as  surely  are  the  opinions  or  conclusions  of  that 
newspaper  worthless.  Men  are  held  up  to  personal  ob- 
loquy, charged  with  merely  selfish  interests,  and  abused 
roundly  by  all  the  party  press  on  one  day  ;  if  they  then 


PERSONAL    OBSERVATIONS— CONCLUSION.         263 

have  the  fortune  to  die  suddenly,  on  the  next  day  before 
the  discussion  is  ended  the  same  papers  that  had  charged 
them  with  being  bribed  with  British  gold,  or  with  seeking 
to  rob  their  neighbors  by  the  perversion  of  the  powers  of 
taxation,  will  hold  them  up  as  excellent  examples  of 
reputable  citizens  or  legislators  who  had  undoubtedly 
been  a  little  mistaken  in  the  direction  of  their  work  but 
had  never  failed  in  conscientious  devotion  to  the  duty 
with  which  they  had  been  charged.  The  praise  may  be 
often  as  much  misplaced  as  the  blame  had  been. 

Fortunately  there  are  conspicuous  exceptions  to  these 
foolish  practices.  Reference  is  often  made  to  previous 
debates  in  the  time  of  Clay,  Webster,  Calhoun,  Benton, 
and  other  party  leaders  of  old  time.  The  writer  has  fol- 
lowed the  tariff  and  currency  debate  of  that  period  in  the 
books  and  of  the  last  few  years  in  the  Congressional  Record. 
He  must  bear  witness  to  a  conclusion  which  will  not  be 
generally  accepted,  namely,  that  for  sincerity  of  purpose, 
mastery  of  detail  and  logical  conclusions  from  the  pre- 
mises upon  which  the  arguments  have  been  based,  the 
debates  of  the  last  five  or  six  years  on  either  side  have 
been  as  far  in  advance  of  those  of  a  former  time  as  the 
statistical  data  and  general  information  in  regard  to  our 
industrial  conditions  now  exceed  what  were  available  in 
any  former  period. 

It  would  be  invidious  to  mention  names,  but  it  is  a  pity 
that  some  method  should  not  be  devised  for  establishing 
a  judicial  board  of  publication  so  that  real  discussions,  the 
genuine  arguments  and  the  impartial  statements  that 
form  the  lesser  part  of  the  Congressional  Record,  might  be 
separated  from  the  set  speeches  prepared  in  the  committee 
rooms  which  are  apt  to  be  addressed  much  more  to  the  con- 
stituency or  to  the  partisans  of  each  side  than  with  any  ex- 
pectation of  influence  in  the  pending  discussion  in  Congress. 


264  TAX  A  TION  AND   WORK. 

The  same  bad  methods  have  affected  private  organiza- 
tions on  either  side  of  the  tariff  question.  Nearly  twenty 
years  ago  the  writer  left  the  Free-Trade  clubs  and  organi- 
zations, which  were  then  active,  simply  for  the  reason 
that  their  methods  were  unjust  and  bad.  They  imputed 
the  most  selfish  and  corrupt  motives  to  those  who  sup- 
ported the  policy  of  Protection ;  while,  on  the  other 
hand,  the  advocates  on  the  Protective  side  seemed  to  lose 
all  sense  of  right  and  reason  in  their  comments  upon  the 
advocates  of  Free  Trade. 

Under  the  influence  of  this  bad  method  of  dealing  with 
what  is  purely  a  business  question,  each  side  has  come 
to  distrust  the  other  so  as  to  prevent  any  co-operation 
in  removing  defects,  both  in  the  tariff  itself  and  in  its 
administration,  which  are  admitted  by  all  and  might  be 
remedied  if  the  opposition  party  in  our  Congress  could 
be  guided  by  the  same  sound  judgment  that  is  exercised 
by  Her  Majesty's  opposition  in  the  British  Parliament, 
whether  Liberal  or  Tory. 

In  the  foregoing  series  the  writer  has  endeavored  to  put 
the  case  of  Protection  versus  Free  Trade,  and  of  Free 
Trade  versus  Protection  upon  its  merits ;  he  has  attempted 
to  deal  with  it  both  on  the  ground  of  principle  and  of 
policy ;  he  has  given  the  reasons  why  there  is  no  distinct 
principle  or  "  rule  of  action  governing  human  beings  " 
upon  which  a  high  tariff  can  be  justified  ;  he  has  also 
given  reasons  why  Free  Trade  although  founded  upon  a 
principle,  that  is  to  say,  upon  a  rule  of  action  governing 
human  beings  when  their  conduct  is  not  altered,  changed, 
or  directed  by  statute  law,  must  yet,  at  present,  be  dealt 
with  as  a  policy  in  practice.  He  has  also  given  reasons 
why  the  rule  of  action  which  would  govern  legislation  if 
there  were  no  need  of  a  revenue  from  customs  or  duties 
upon  imports  has  been  and  must  be  modified  by  that  fact. 


PERSONAL   OBSERVATIONS— CONCLUSION.        265 

Therefore,  the  question  of  Free  Trade  as  well  as  Pro- 
tection now  becomes  a  matter  of  policy  rather  than  one 
of  principle.  This  leads  to  a  similar  conclusion  which 
must  govern  the  action  of  both  parties ;  to  wit,  in  fram- 
ing measures  for  the  collection  of  revenue  from  the  duties 
upon  imports  such  discrimination  must  be  exercised  as 
will  most  certainly  promote  domestic  industry  and  protect 
home  labor. 

That  conception  of  a  true  policy  being  established  the 
only  question  remaining  open  is  simply  this:  Will  Pro- 
tection be  most  fully  assured  by  exempting  materials  of 
foreign  origin  from  taxation  and  promoting  the  inter- 
dependence of  states  and  nations,  or  by  taxing  such 
material  and  stopping  commerce?  Shall  we  more  surely 
promote  domestic  industry  and  protect  home  labor  by 
isolating  this  nation  from  others  and  attempting  to  estab- 
lish what  is  called  "  national  industrial  independence " 
in  place  of  international  interdependence?  One  does 
not  like  to  use  such  long  words ;  in  the  vernacular,  Will 
a  State  be  bettered  by  attempting  to  support  itself 
wholly,  or  will  it  do  better  by  exchanging  products  with 
other  countries  for  mutual  benefit? 

In  dealing  with  the  case  from  the  latter  point  of  view, 
so  far  as  I  have  presented  the  facts  I  shall  probably  have 
furnished  arguments  for  both  parties  in  future  controver- 
sies as  I  have  in  the  past. 

When  I  have  borne  witness  to  the  fact  that  this  country 
is  more  prosperous  than  any  other,  and  has  prospered 
more  in  the  last  twenty-five  years  than  ever  before,  I  shall 
have  furnished  even  the  advocates  of  the  McKinley  act 
with  an  argument  on  which  they  will  attempt  to  sustain 
that  measure,  which  is  so  obnoxious  to  myself. 

When  I  have  stated  that  the  obnoxious  provisions  of 
the  McKinley  act  for  raising  a  revenue  of  about  fourteen 


266  TAXATION  AND    WORK. 

million  dollars  a  year  by  taxation  on  crude  materials  of 
foreign  origin  which  are  necessary  to  our  domestic  indus- 
try have  cost  this  country  fifty-fold  the  amount  of  revenue 
that  is  received  by  the  government,  or  seven  hundred 
millions,  in  a  single  year,  I  shall  have  furnished  an  argu- 
ment with  which  the  advocate  of  tariff  reduction  will 
prove  his  case  on  irrefutable  evidence. 

When  I  have  declared  and  attempted  to  prove  that  the 
tariff  has  been  one  of  the  minor  forces  in  its  effect  upon 
the  direction  of  labor  or  investment  of  capital  in  this 
country,  I  shall  have  disappointed  the  advocate  of  Free 
Trade,  and  may  have  taken  from  him  what  seems  to  be  a 
potent  argument. 

On  the  other  hand,  when  I  have  attempted  to  prove 
that  the  obstruction  of  the  means  of  payment  with  which 
foreign  nations  buy  the  excess  of  our  farm  products  is 
injurious  in  the  extreme,  I  shall  have  furnished  the  advo- 
cate of  Tariff  Reform  with  most  potent  reasons  for  mak- 
ing a  change. 

When  I  have  said,  however,  that  the  long  existence  of 
a  high  tariff  has  given  a  different  direction  to  the  invest- 
ment of  a  large  amount  of  capital  and  has  provided  em- 
ployment for  a  very  large  body  of  working-people  on 
different  lines  from  those  on  which  their  labor  would  have 
been  exerted  under  other  conditions,  I  shall  have  given 
complete  justification  for  maintaining  even  high  revenue 
duties,  for  a  limited  period,  upon  the  import  of  the  finer 
products  of  our  mills  and  of  our  workshops  which  cannot 
be  gainsaid.  When  I  have  attacked  the  general  policy  of 
the  McKinley  act,  I  shall  be  charged  wnth  being  a  member 
of  the  Cobden  Club  and  subject  to  the  subtile  influence 
of  British  gold,  and  when  I  have  stood  up  for  the  policy 
of  continuing  the  revenue  duties  upon  finished  fabrics  for 
a  reasonable  period,  I  shall  be  charged  by  the  intolerant 


PERSONAL    OBSERVATIONS — CONCLUSION.         26/ 

free  trader  with  making  an  exception  in  favor  of  my  im- 
mediate associates  at  the  cost  of  the  wool  growers  and 
the  makers  of  pig-iron. 

When  I  have  stated  that  proofs  can  be  submitted  that, 
with  the  exception  of  certain  industries  that  have  been 
protected  not  only  by  a  tariff,  but  also  by  patents  and  the 
control  of  great  bodies  of  ore  or  coal,  the  branches  of 
manufacturing  which  have  been  subjected  to  the  stimulus 
of  a  high  tariff  have  not  been  as  a  whole  profitable, — I 
shall  have  taken  away  from  the  free-trade  orator  one  of 
the  principal  grounds  of  his  attack. 

It  is  necessary  that  all  these  varied  misconceptions 
should  be  removed,  and  that  the  pending  discussion 
should  not  be  obscured  by  errors  and  mistakes  on  either 
side. 

I  long  since  bore  witness  to  the  very  grave  danger  that 
would  ensue  from  bad  methods  of  changing  even  a  bad 
tariff  system.  I  have  witnessed  the  results  of  such 
methods  and  the  present  recurrence  of  such  danger.  The 
so-called  free-trade  tariff  of  1846  is  an  instance  of  a  bad 
method  of  reforming  a  bad  tariff.  The  tariff  of  1842, 
which  was  by  intention  a  highly  protective  tariff,  discrim- 
inated in  both  directions  by  high  duties  on  finished 
fabrics,  and  low  duties  or  the  free  admission  of  crude 
materials.  It  led  to  a  large  investment  of  capital  in  many 
branches  of  work  by  men  who  were  not  capable  of  under- 
taking them  under  ordinary  conditions,  but  who  might 
perhaps  have  learned  how  to  do  the  work  except  for 
changes  made  in  the  very  reverse  direction  in  the  tariff  of 
1846.  This  tariff  has  been  called  a  free-trade  tariff,  it  was 
really  nothing  of  the  kind.  It  was  a  measure,  as  I  have 
been  informed,  that  was  framed  under  the  direction  of 
the  late  Robert  J.  Walker  by  a  committee  of  custom- 
house officers,  and  it  was  carried   under  party  control 


268  TAXA  TION  AND    WORK. 

without  amendment.  In  many  instances  it  raised  the 
duties  on  crude  materials  above  what  they  had  been  while 
it  reduced  them  on  the  finished  fabrics.  It  thus  discrim- 
inated against  the  very  branches  of  industry  which  had 
been  to  some  extent  unwholesomely  promoted  under  the 
previous  act  of  1842.  Unnecessary  harm  was  done  by 
raisin?  the  duties  on  crude  materials,  and  this  disaster  was 
attributed  in  general  terms  to  what  became  known  as  "  A 
Free-Trade  Measure."  This  act  was  subsequently 
amended  by  the  abatement  of  the  duties  on  crude 
materials,  to  the  end  that  under  the  tariff  of  1857,  in 
which  very  low  rates  compared  with  those  now  in  force 
were  put  upon  finished  fabrics  while  crude  materials  were 
either  free  or  subject  to  low  duties,  the  progress  in  the 
manufacturing  arts  which  had  been  subject  to  great  varia- 
tions and  fluctuations  previously,  was  more  steady,  uni- 
form, and  freer  from  great  fluctuations  than  under  any 
system  of  duties  which  has  ever  come  under  the  observa- 
tion of  the  writer. 

This  danger  of  lack  of  discrimination  in  amending  a  bad 
measure  has  again  happened  in  recent  years.  It  has  been 
proposed  by  conspicuous  persons,  even  among  the  advo- 
cates of  protection,  to  reduce  the  duties  on  goods  and  in 
the  same  measure  to  raise  them  higher  on  the  materials 
which  are  necessary  in  these  protected  manufactures. 

Again,  some  of  the  measures  which  are  even  now  pend- 
ing in  the  present  Congress,  represent  neither  a  principle 
nor  a  sound  business  policy  ;  they  are  sectional,  or  else 
they  have  been  promoted  by  mere  opposition  to  trusts. 
If  suitable  discrimination  were  applied  in  the  preparation 
of  a  broad  and  general  measure  of  reform,  the  duties,  for 
instance,  upon  cotton  tics  would  not  be  taken  off  until 
the  manufacturer  of  cotton  ties  had  been  placed  in  a  posi- 
tion to  compete  on  even  terms  with  the  foreign  iron- 


PERSONAL   OBSERVATIONS — CONCLUSION.         269 

worker  by  the  removal  of  the  duties  upon  the  material 
from  which  cotton  tics  are  made.  The  removal  of  the 
duty  upon  binding  twine  may  not  be  justified  on  any 
sound  principles  of  discrimination  in  framing  a  revenue 
measure,  until  the  manufacturer  of  binding-twine  and 
cordage  has  been  given  a  position  equal  in  advantage  to 
his  foreign  competitor  by  taking  off  the  tax  on  the  mate- 
rials that  enter  into  the  construction  not  only  of  his 
goods  but  also  of  his  machinery.  The  proposition  to 
abate  duties  on  some  classes  of  crude  materials  while 
maintaining  them  on  others,  because  their  abatement 
might  have  a  sectional  effect  adverse  to  party  success  is 
without  justification.  On  the  other  hand,  all  these  meas- 
ures are  merely  tentative,  and  may  perhaps  be  defended 
in  order  to  show  the  final  direction  on  which  a  reform 
of  the  tariff  would  be  carried  into  effect  in  one  com- 
prehensive bill  if  it  had  not  become  a  mere  party 
question. 

Again,  while  the  rule  of  high  wages  derived  from  low 
cost  of  production  may  be  proved  to  govern  all  the  arts 
which  have  been  of  necessity  conducted  within  the  limits 
of  our  own  country  in  which  our  interstate  or  domestic 
commerce  is  absolutely  free,  this  rule  has  been  subject  to 
a  variation  in  our  relations  with  foreign  countries.  By 
keeping  the  demand  of  this  country,  which  possesses  the 
greatest  power  of  purchase,  from  being  freely  made  upon 
the  textile  factories,  iron  foundries,  workshops,  and  other, 
establishments  of  England  and  other  countries,  it  may 
doubtless  be  proved  that  the  rates  of  wages  in  these  par- 
ticular arts  have  been  kept  lower  in  Europe  than  they 
would  otherwise  have  been  had  our  demand  been  free — 
while  the  rates  of  wages  in  these  specific  arts  in  this  coun- 
try may  have  been  maintained  as  high  as  the  high  rates 
of  wages  that  prevail  in  other  pursuits ;  such  rates  being 


2/0  TAA'A  TION  AND   WORK. 

higher  than  those  paid  under  existing  conditions  in  foreign 
countries.  It  follows  of  necessity  that  if  these  specific 
finished  products  were  suddenly  admitted  to  this  country 
free  of  duty,  there  would  be  a  destruction  of  capital  and 
a  taking  away  of  established  methods  of  work  which 
would  be  wholly  destructive  and  unjustifiable.  Discrim- 
ination may  rightly  be  applied  to  the  maintenance  of 
duties  for  revenue  purposes  on  these  finer  goods  and 
fabrics  which  are  of  voluntary  and  not  of  necessary  use. 
Such  duties  may  be  maintained  without  harm  to  the  con- 
sumers until  the  establishments  have  had  time  to  become 
adjusted  to  the  new  conditions  of  free  commerce  in  the 
component  materials  that  enter  into  their  products. 

What  the  exact  effect  of  the  adoption  of  this  policy 
of  common-sense  would  be  upon  existing  forms  of  indus- 
try can  hardly  be  demonstrated  in  advance.  In  the 
judgment  of  the  writer,  the  stimulus  to  the  textile  arts  in 
the  useful  or  necessary  directions,  and  to  the  higher 
branches  of  metal  working  would  be  very  great ;  it  would 
probably  lead  to  a  reduction  in  the  import  of  many  kinds 
of  textile  manufactures,  and  to  an  increase  of  our  ex- 
ports of  textiles  and  yet  more  of  metal  work.  It  may  be 
observed  that  our  export  of  what  are  called  manufactures 
is  even  now  increasing  in  considerable  measure.  In  the 
line  of  metallurgy  it  consists  of  goods  of  the  highest 
grades  to  which  most  skilful  labor  is  applied  at  the  highest 
rates  of  wages  ;  that  branch  of  export  traffic  would  be 
very  greatly  stimulated  if  the  consumers  of  metal  in  this 
country  could  secure  their  supply  of  crude  materials  on 
the  same  terms  with  their  competitors  in  other  countries, 
whatever  the  actual  prices  might  be  in  any  given  year. 
The  same  reasoning  would  be  in  a  measure  true  in  its 
application  to  staple  textile  fabrics  ;  the  finer  kinds  of 
textiles,  however,  depend   so  much  upon  style,  fashion, 


PERSONAL    OBSERVATIONS — CONCLUSION.         2/1 

and  fancy  for  their  sale,  that  we  cannot  predicate  the 
future  conditions  upon  any  single  rule. 

It  must,  however,  be  here  remarked  that  Great  Britain 
is  our  principal  customer.  She  has  flooded  us  for  many 
years  with  British  gold  in  order  to  promote  her  own  in- 
terests. Through  the  long-continued  efforts  of  Richard 
Cobden,  John  Bright  (antecedent  to  the  conversion  of  Sir 
Robert  Peel  and  W.  E.  Gladstone)  for  the  remission  of 
duties,  the  British  taxes  upon  the  import  of  our  grain, 
meat,  dairy  products,  and  cotton  were  removed.  The 
effect  of  this  work  of  Cobden,  and  of  his  successors  who 
now  constitute  the  Cobden  Club,  has  been  such  that 
within  the  last  few  years  we  have  exported  to  Great 
Britain  two  hundred  and  fifty  million  dollars'  ($250,- 
000,000)  worth  of  our  domestic  products  in  excess 
of  our  imports  from  Great  Britain.  The  figures  of 
1891,  disregarding  fractions,  show  exports  from  this 
country  to  Great  Britain  $445,000,000  in  value;  imports 
$195,000,000.  The  difference,  $250,000,000,  consists  of 
British  gold  which  has  been  placed  at  the  credit  mainly  of 
our  farmers  who  have  found  in  Great  Britain  the  most 
profitable  place  for  the  sale  of  their  excess  of  grain, 
dairy  products,  meat,  and  cotton.  The  drafts  for  our 
purchases  in  other  countries  of  sugar  and  of  tea  and 
coffee  and  other  food  materials,  as  well  as  of  hides,  wool, 
dye-woods,  and  other  articles  that  enter  into  our  manu- 
factures, have  been  drawn  against  this  great  fund  of 
British  gold  for  the  support  of  our  manufacturing  and 
mechanical  industries. 

I  have  thus  given  the  motive  of  this  series  of  essays, 
with  the  hope  that  the  time  may  come — perhaps  in  the 
second  session  of  the  present  Congress — when  legislators 
will  adopt  what  may  be  called  the  "  method  of  agree- 
vicnt "  ;  or  of  cancellation  by  agreement  of  all  points  in 


2/2  TAXATION  AND   WORK. 

this  problem  that  can  thus  be  eliminated.  It  is  related 
that  two  old-time  clergymen  of  different  denominations 
had  been  disputing  a  longtime  upon  many  points  of  doc- 
trine. One  day  it  occurred  to  them  to  undertake  the 
"  method  of  agreement,"  so  as  to  bring  their  points  of 
difference  into  such  clear  aspect  that  they  could  be  reason- 
ably adjusted.  In  pursuance  of  this  method  they  finally 
eliminated  so  many  of  the  points  of  contention  that  all 
there  was  left  for  dispute  was  a  different  construction 
given  to  one  Hebrew  word  in  the  Hebrew  version  of  the 
Bible  ;  upon  that  one  word  they  then  agreed  to  differ 
without  further  contention. 

If  this  tariff  question  could  be  taken  up  by  a  jury  of 
twelve  men,  selected  on  the  ground  of  their  being  com- 
petent to  deal  with  the  whole  subject,  presided  over  by  a 
true  jurist,  an  act  for  the  collection  of  an  ample  revenue 
for  the  support  of  this  government,  to  be  wisely  and  not 
penuriously  expended,  could  be  framed  upon  conditions 
that  would  assure  to  the  people  that  all  taxes  that  were 
paid  by  them  would  be  received  into  the  Treasury  of  the 
United  States.  This  work  could  be  done  by  adjusting 
the  points  on  which  all  parties  are  now  agreed,  with  as  lit- 
tle difficulty  as  that  which  was  met  by  the  clergymen  in 
doing  away  with  the  points  of  contention  by  which  they 
had  been  so  long  parted. 

When  it  shall  become  useless  for  any  specific  body  of 
men,  for  any  district,  for  any  State,  or  for  any  section 
to  attempt  to  promote  public  legislation  for  the  private 
support  of  any  specific  branch  of  work  except  tJirongJi  ex- 
emption from  taxation, — the  prime  cause  of  corruption  in 
the  civil  and  political  service  of  this  country  will  have 
been  removed.  Then,  and  only  then,  will  a  government 
of  the  people,  by  the  people,  for  the  people,  be  absolutely 
assured. 


PERSONAL    OBSERVATIONS — CONCLUSION.         273 

It  may  perhaps  be  held  to  be  somewhat  presumptuous 
for  any  one  person  to  attempt  to  deal  with  this  great 
public  question  in  the  way  in  which  it  has  been  treated  in 
this  series  of  essays  by  calling  "  A  plague  on  both  your 
houses," — upon  the  doctrinaire  free-traders  and  the  in- 
tolerant advocates  of  McKinleyism  alike. 

That  argument,  however,  does  not  concern  the  writer. 
He  has  been  guided  by  the  rule  of  demand  and  sup- 
ply in  providing  such  articles,  essays,  and  treatises  upon 
economic  subjects  as  might  be  called  for  in  a  way  that 
would  warrant  the  work  he  has  done  in  their  preparation. 
Years  ago  the  writer  found  out  that  the  community 
would  not  be  reformed  by  agitators,  and  that  the  only 
way  for  one  who  did  not  occupy  a  conspicuous  public 
position  to  bring  about  righteous  changes  would  consist 
in  a  close  and  constant  observation  and  study  of  events, 
and  in  biding  the  time  when  the  very  circumstances  of 
the  hour  would  force  public  attention  to  be  given  to 
these  great  problems. 

For  many  years  subsequent  to  the  restoration  of  specie 
payments  on  the  ist  of  January,  1879,  ^^  became  apparent 
that  the  tariff  question,  in  which  the  writer  had  previously 
taken  quite  an  active  part,  had  become  an  issue  of  lesser 
importance  as  compared  to  the  maintenance  of  the  public 
credit  and  of  a  sound  currency.  So  long  as  one  party 
could  be  depended  upon  more  than  another  on  that  issue, 
it  seemed  useless  to  continue  a  discussion  on  the  tariff 
question  from  which  no  practical  results  could  be  attained, 
because  both  vote  and  action  must  yield  to  the  more 
important  problem  of  the  currency. 

It  happened,  unfortunately,  that  the  party  that  had 
been  dominant  for  many  years  and  upon  whom  rested  the 
responsibility  of  the  maintenance  of  a  sound  currency, 
had  also  committed  itself  to  such  tariff  naeasures  as  the 


274  TAXA  TION  AND   WORK. 

acts  of  1867  and  subsequent  tariff  acts  down  to  1883  in- 
clusive. It  therefore  became  necessary  that  the  poHcy  of 
increasing  duties  in  the  vain  effort  to  give  protection  by 
excessive  taxation  must  run  its  course.  It  was  long  since 
manifest  that  it  would  culminate  in  some  measure  corre- 
sponding to  the  McKinley  act,  by  which  the  fallacy  and 
futility  of  the  attempt  to  protect  by  privation  of  imports 
would  be  finally  exposed. 

That  time  has  come.  Members  of  both  political  parties 
have  now  united  in  maintaining  the  credit  of  the  nation, 
and  will  remain  united  and  hold  out  to  the  end  in  suc- 
cessfully sustaining  a  safe  standard  of  value. 

The  policy  of  promoting  American  industry  by  the  re- 
duction of  taxation  and  by  the  exemption  of  crude 
materials  from  heavy  duties,  has  now  taken  firm  hold 
upon  the  mass  of  the  people.  Under  such  conditions  it 
may  be  held  to  be  the  duty  of  every  man  upon  whom  a 
demand  may  be  made,  to  submit  what  he  believes  to  be 
the  facts  and  to  give  the  conclusions  on  which  right 
measures  of  reform  may  be  framed.  Under  such  a  con- 
dition of  parties  as  that  which  now  exists  one  should 
adhere  strictly  to  the  facts  in  the  case ;  by  so  doing  he 
will  inevitably  take  away  the  foundations  of  many  of  the 
delusions  that  have  existed  on  either  side  of  this  discus- 
sion. The  intolerants  on  either  side  may  alike  reject  his 
conclusions,  but  it  may  happen  that  they  will  still  serve  a 
useful  purpose. 

The  interest  of  the  whole  people  of  this  country  is  now 
excited  upon  questions  of  finance  and  taxation.  The 
Farmers'  Alliances,  the  Trades'  Unions  of  the  workmen, 
the  Trade  Associations  of  the  employers,  the  advocates 
of  Woman  Suffrage,  and  the  Labor  organizations,  are 
alike  trying  to  deal  with  the  problems  that  have  been 
treated  in  these  essays.     That  is  a  more  hopeful  condition 


PERSONA  L    OBSER  VA  TIONS—  CONCL  USION.         275 

than  the  inertia  which  has  given  an  opportunity  to  the 
advocate  of  special  legislation  to  carry  out  his  measures 
without  remark. 

In  every  emergency  the  great  mass  of  people  may  be 
relied  upon  to  support  that  policy  which  is  right.  Slow, 
but  sure  in  action,  the  people  detect  the  specious  charla- 
tan who  covers  his  selfish  purposes  under  the  show  of 
working  for  the  public  good.  They  insist  upon  the  truth, 
the  whole  truth,  and  nothing  but  the  truth.  That  is  what 
the  writer  has  endeavored  to  present  in  this  work  with- 
out fear  or  favor,  in  response  to  an  urgent  demand  made 
upon  him  from  many  quarters. 

It  is  interesting,  for  one  who  is  convinced  that  the 
logic  of  events  will  govern  the  actions  of  men,  to  observe 
that  even  during  the  short  period  that  some  of  these 
essays  have  been  in  process  of  publication  in  the  daily 
press,  the  negotiation  of  additional  treaties  of  reci- 
procity in  trade,  the  passage  of  a  bill  to  admit  foreign- 
built  steamships  to  American  registry,  and  the  increase 
in  the  revenues  of  the  government  from  liquors  and 
tobacco  fully  sustain  all  that  has  been  said  about  the 
tendency  of  events,  as  well  as  all  that  has  been  submitted 
in  regard  to  the  ability  of  the  country  to  remove  every 
obnoxious  tax  and  yet  give  full  assurance  of  ample 
revenues  for  the  future  conduct  of  the  government, 
coupled  with  sure  protection,  by  exempting  the  materials 
required  in  our  domestic  processes  from  taxation,  and  by 
so  doing  enabling  our  foreign  customers  to  pay  with  their 
own  products  for  the  products  of  our  farms  and  factories. 

The  Democratic  party  has  become  the  party  of  Tariff 
Reform  and  reduction.  The  Republican  party,  having 
found  out  that  McKinleyism  is  a  blunder,  seeks  by  in- 
direction to  accomplish  the  same  purpose  through  reci- 
procity and  the  free  list.     Ere  long  the  logic  of  the  case 


276  TAXA  TION  AND    WORK. 

will  govern,  so  that  each  party  may  try  to  outstrip  the 
other  in  giving  true  protection  to  the  manufacturer,  the 
mechanic,  and  the  farmer  alike  by  the  complete  exemp- 
tion of  all  material  from  any  taxation. 

In  closing,  I  may  again  call  attention  to  certain  facts 
which  are  not  yet  patent  to  all.  The  area  of  the 
continent  of  Europe,  omitting  the  uninhabitable  por- 
tions of  the  extreme  north,  is  about  3,000,000  square 
miles.  The  area  of  the  United  States,  omitting  Alaska, 
is  about  the  same.  Upon  each  continent  there  is  every 
variety  of  climate  except  extreme  heat,  every  variety  of 
soil,  and  every  variety  of  product  except  the  tropical.  In 
the  United  States  the  differences  of  race,  creed,  color,  and 
condition  are  greater  than  in  Europe.  The  methods  of 
local  taxation  are  as  various  or  more  so.  On  the  one 
continent  all  forces  tend  to  peace,  order,  and  industry. 
There  is  abundance  and  great  material  welfare.  On  the 
other  continent  all  forces  tend  to  war,  scarcity,  pesti- 
lence, and  even  famine,  to  disorder,  and  to  the  enforced 
idleness  of  the  barracks  and  the  camp.  What  is  the  one 
difference  in  the  conditions  of  the  people  of  the  two  con- 
tinents? On  the  one  side  the  people  of  each  and  every 
State  serve  each  other  under  a  system  of  absolute  Free 
Trade  such  as  was  never  before  assured  to  an  equal  num- 
ber of  people  nor  ever  before  extended  over  half  a  con- 
tinent. On  the  other,  the  barriers  to  mutual  service  are 
sustained  by  the  armies  which,  except  for  these  barriers, 
might  be  disarmed. 

The  time  may  not  be  far  distant  when  the  intelligence 
of  the  people  of  this  country  will  be  equal  to  the  oppor- 
tunity that  is  offered  them  to  establish  the  one  factor  in 
our  liberty  of  which  we  have  been  so  long  deprived, — the 
liberty  of  commerce. 


INDEX. 


Account,  current,  of  government  ex- 
penditures for  fiscal  year  iSgo-'gi,  7  ; 
of  United  States  with  tax-payers  re- 
quires immense  amount  of  clerical 
work,  41  ;  proper  form  in  whicli  to 
state  income  of  United  States,  i 

Accounts,  enormous  volume  of,  neces- 
sary in  service  of  nation,  41 

Activity  promised  ;  depression  result 
of  McKinley  tariff,  58 

Ad-valorem  duty  on  woollen  and 
worsted  fabrics,  77 

"  Agreement,  method  of,"  would  settle 
tariff  question,  271 

Agricultural,  implements,  we  excel  in 
manufacture  of,  g6  ;  machinery,  in- 
fluence in  production  of  wheat,  163 

Agriculture,  German,  in  a  bad  way, 
174  ;  insignificant  import  of  products 
of,  93  ;  number  employed  in,  53  ; 
our  supremacy  in  products  of,  148  ; 
per  cent,  of  people  occupied  in,  150  ; 
protection  to,  150;  United  States 
excels  in  products  of,  55 

Aldrich,  Senator  Nelson  \V.,  defines 
principle  of  Protection,  82 

Alfalfa,  clover,  renovators,  149 

Alliance  of  both  parties  begun  in  recent 
action  upon  free  coinage,  71 

Alternative  method  of  tariff  reform,  23 

American  labor  should  be  protected  in 
choice  of  subjects  for  taxation,  45 

"American  System  "  of  Protection  not 
American,  48 

American  workmen,  taxation  should 
protect,  61 

Anarchist,  nihilist,  and  communist  are 
complements  of  policy  of  blood  and 
iron,  189 


Anarchy,  danger  in  Europe  caused  by 
lack  of  food,  191 

Appleton,  Nathan,  took  ]iart  in  Free 
Trade  meeting,  47 

Armies  and  navies  must  be  supplied 
with  food,  178 

Armies,  waste  of,  iSo 

Arms-bearing  age,  men  of,  in  France, 
Belgium,  Germany,  and  Holland, 
185  ;  number  of  men  of,  43  ;  ratio 
of  United  States  soldiers  compared 
to  European,  187 

Army  and  navy  interest-bearing  debt. 
Great  I'ritain's,  compared  to  Ihiited 
States,  188 

Army,  carefully  fed  so  as  to  secure  the 
maximum  of  energy,  190  ;  cost  of, 
II  ;  German,  must  be  subsisted,  11  ; 
importance  of  feeding,  178  ;  tax 
upon  industry  of  Continent  of 
Europe,  186  ;  United  States,  com- 
pared to  armies  of  European  stales, 
42,  43  ;  United  States,  serves  only 
as  a  border  police,  43 

Articles,  in  crude  condition  (Class  B), 
duties  on,  13  ;  wholly  or  partly 
manufactured! Class C),  duties  on,  13 

Artificial,  conditions  induced  l)y  high 
tariff,  59  ;  result  of  Protection  less 
favorable  than  natural  course,  119 

Art,  no  important,  estalilished  here  as 
result  of  high  tariff,  51 

Arts  and  manufactures  established  be- 
fore Hamilton's  tariff,  51 

Asia,  Africa,  and  otiier  tropical  coun- 
tries, slight  use  of  machine! y  in,  173 

Asia,  Africa,  South  America,  and  Aus- 
tralia, why  we  cannot  supply  ma- 
chinery to,  137 

Atkinson,  Edward,  his  Report  on  Bi- 
metallisin,  214 


277 


278 


INDEX. 


Atlanta  Exposition,  18S1,  cotton  niami- 

facture  at,  165 
Australia  and   New   Zealand,   rate   of 

wages  in,  xvi. 
Axes,  price  in  i860  and  1880,  168 


B 


Bankint;,  facilities,  little  increase  in, 
2i();  restrictive  leLjislation  upon, 
should  lie  removed,  217 

Banks,  henelit  of,  217 

Barley,  Canadian,  i()7 

Bastiat,  on  workman's  share  of  prod- 
uct, 162 

Belgium,  duties-for  rc\eiuie  only,  181; 
exports  fn^m,  i  'ai 

Berlin  decrees  of  Napoleon,  effect  of, 
108 

Bessemer  steel,  patent,  147  ;  profits 
in  manufacture  of,  not  due  to  Pro- 
tection, g9 

Best-fed  nation  in  workl  is  the  United 
States,  175 

Bigelow,  Erastus  B,  author  of  Wool 
and  Woollen  Tariff,  76  ;  defines  his 
position  on  tariff,  78  ;  devotee  of 
protective  system,  72 ;  framer  of 
present  tariff  on  wool  and  woollens, 
xiii  ;  justification  of  protective  du- 
ties, 77  ;  policy,  failure  of,  in  regard 
to  wool,  78 

Bi-nii'tnliism,  Atkinson's  Report  ou,i\.^ 

Binding  twine,  duties  upon,  269 

Blacksmithing,  no  foreign  competition 
in,  97 

Blaine,  James  ().,  on  tariff  question,  84 

Bland  act  condemned,  241 

Blue  Book,  gfjvernment,  8 

Bonds  ]iurchased  before  maturity  l)y 
revenue  derived  from  taxing  crude 
materials,  143 

Boston,  price  of  adecpiate  nutrition  in, 
190 

Bounties  and  subsidies,  unwise,  vi  ; 
upheld  by  legislators  who  decry 
commerce,  106 

Bounties,  direct  and  indirect,  sanc- 
tioned by  the  people,  116;  fallacious 
expectations  of,  fostered  by  McKin- 
leyites,  129;  justifieil,  255;  justified 
by  Second  Act  of  First  Congress, 
115;  premiums,  etc.,  Hamilton  on. 


87  ;  to  sugar-planters  justified  by 
Supreme  Court,  114;  to  sugar- 
planteis  might  better  be  used  to 
increase  salaries  of  jiublic  officials, 
40  ;  to  sugar  planters,  taxation  for, 
8  ;  vested  right  in,  1 17 

Breadstuffs,  labor  cost  in  ])roduction 
of,  xix 

Breckinridge,  C.  R.,  and  Wm.  C, 
work  on  Mills  Tariff  Bill,  69 

Pirick-  and  tile-making,  97 

British  Association  for  the  Advance- 
ment of  .Science  in  1SS7  discusses 
bi-metallism,  100 

"British  Free  Trade"  in  I'nitcd 
States,  123 

British,  gold,  American  farmers,  271; 
steamers,  why  we  cannot  compete 
with,  136  ;  tariff  reform.  Peel's 
first  measure,  33 

Building  trades,  extent  of  ;  necessity 
of  exemption  of  materials  from 
taxation,  151 

Burden,  of  tax  put  ui)on  other  coun- 
tries a  misconception,  193  ;  our 
relative,  compared  to  European,  42 

f^ureau  of  Labor,  Seventh  Rejiort,  204 

Business  men,  salaries  much  greater 
than  government  officials,  40 

"  Buy  in  cheapest  market,  sell  in 
the  dearest,"  125 


Cabinet  officers,  salary  of,  40 
Cairnes',  J.  E.,  theory  of  wages,  161 
California,  wheat  farm,  figures  almost 
incredible,    164  ;    wheat   production 
in,  164 
Canada,  and  United  States  during  the 
Civil  War,   105  ;  certainty  of  com- 
mercial union  with,  171  ;  commerce 
with,  199  ;  effect  of  duties  on  farm 
jiroducts  of,    129;    immigration    to 
United     States,      195  ;     reciprocity 
with,    195  ;    relation    with     United 
States  during  war,  105  ;  sales  of  ])rod- 
ucts  of  agriculture  to,    56  ;   United 
States,  commerce  between,  193 
Canadian,  forest,  ]iroduct  needed,  97  ; 
wages    depressed,    hence    Canadian 
immigration  to  United  States,  198  ; 
wheat,  effect  of  our  duties  upon,  196 


INDEX. 


279 


Canadians,  competition  of,  with  our 
workmen,  130;  French,  workers  in 
our  textile  factories,  130 

Canal,  Erie,  value  of  products  moved 
over,  222 

Canned  provisions,  tax  on  tin-plate, 
forbids  exports,  133,  134 

Capital,  and  labor,  apparent  antago- 
nism, 160 ;  becomes  more  auto- 
matic, brings  about  increasing  pro- 
duct, 161  ;  competition  with  capital, 
162  ;  injudicious  to  destroy  it  by 
immediate  Free  Trade,  5y ;  less 
required,  as  machinery  becomes 
more  effective,  161 

Caprivi's,  Chancellor,  argument  for 
reciprocity  treaties,  105  ;  resigna- 
tion, 174  ;  speech,  192  ;  speech  on 
importance  of  feeding  army,  178  ; 
verdict  upon  German  McKinleyism, 

174 
Census,  Eleventh,  cost  of,  10 ;  of 
1880,  statistics  of  wages  and  prices 
in  Vol.  XX.,  166  ;  of  1880,  94  ;  of 
1890,  13  ;  of  1890  should  contain 
statistics  of  wages  and  prices  from 
1880  to  1890,  166 
Central   Pacific  R.  R.  Sinking  P\ind, 

II 
Cheap  Cotton  by  Free  Labor,  145 
(Jheese  and  butter-making,  97 
Chief  Justice,  salary  of,  40 
Circuit  Court  judges,  salary  of,  40 
Citizens'  rights,  decision  of  Supreme 

Court,   121 
Civil   Service,  no  true  order  of  merit 
in,    41  ;    people's    will    that    it    be 
maintained,     24  ;     reform     needed 
in  salaries  of  government  oflicials. 

Clay,  Henry,  debates  in  Senate  with 
Webster  on  tariff,  48  ;  defends 
"The  American  System,"  48; 
Webster,  etc.,  debates  in  time  of, 
263 

Cleveland,  tariff  message  of,  vii 

Clothing,  numbers  employed  in  manu- 
facture of,  153 

Coal,  and  coke  must  be  put  in  free 
list,  xiv  ;  and  iron  control  commerce 
of  world,  138  ;  cost  ri'-ing  in  Eng- 
land, 138  ;  ores,  crude  iron,  evil 
effect  of  tax  on,  29 


Cobden  Club,  and  British  gold,  266  ; 
and  Free  Trade,  271 

Cobden's  efforts  for  repeal  of  duties, 
271 

Coinage,  a  government  monopoly, 
2x6  ;  defined,  206 

Coin,  must  be  worth  as  much  after  it 
is  melted,  209  ;  value  derived  from 
weight,  206  ;  value  of,  depends  on 
weight,  233 

Coins,  foreign,  gold,  E.  O.  Leech's 
talile  of  values,  236  ;  foreign,  gold, 
Norman's  table  of  values,  234 ; 
foreign,  silver,  E.  O.  Leech's  table 
of  values,  237  ;  foreign,  silver,  Nor- 
man's table  of  values,  235 

Cold  climate,  stimulus  to  textile  arts, 

Collectivism,  views  in  regard  to  .State 
possession  of  property,  I 

Columbus,  108 

Commerce,  barriers  to,  will  be  re- 
moved, 276  ;  centre  of,  may  be 
brought  here  by  Free  Trade,  219; 
consists  of  exchanges  conferring 
mutual  benefit,  80 ;  domestic,  of 
United  States  compared  to  interna- 
tional commerce  of  all  nations,  1 1 1  ; 
foreign,  obstructed  l:)y  ]iri:)hibitive 
duties,  230  ;  Great  Britain's,  183  ;  in 
our  steamships  forbidden  to  United 
States  by  reason  of  its  jirotective 
policy,  37  ;  international,  a  state  of 
passive  war — stupendous  blunder, 
109  ;  of  world,  control  given  to 
Great  Britain  by  stability  of  mone- 
tary system,  183  ;  of  world,  we  hold 
key  to,  183  ;  privation  of,  through 
tax  on  crude  materials,  143  ;  re- 
garded as  passive  international  war 
by  cranks,  105 

Commercial  flag  of  Great  Britain 
dominates  every  sea  by  reason  of 
Free  Trade,  37  ;  wars  caused  by 
misconception  of  balance  of  trade, 
106 

Common-sense,  effect  of  policy  of,  270 

Communism,  views  in  regard  to  State 
possession  of  jiroperty,  i 

Compensation  of  United  States  officials 
beggarly,  39  ;  to  public  officials, 
public  no  conception  of  meanness 
of,  40 


28o 


nXDEX. 


Competition,  among  nations  narrowed 
down,  iSi  ;  danger  of  foreign,  ex- 
aggerated, gi  ;  foreign,  none  in 
trade  and  transportation,  or  jirofes- 
sional  and  personal  service,  55  ; 
foreign,  with  our  finished  manufac- 
tures, cannot  determine  rate  of,  55  ; 
with  Ohio  in  import  of  prothict  of 
like  kinil  necessarily  very  small,  56  ; 
worst  kind,  induced  hy  bounties, 
114 

Congress,  has  no  power  to  legislate 
what  occupations  shall  or  shall  not 
be  pursued,  119  ;  has  power  to  levy 
duties  for  the  general  welfare," 
254  ;  has  power  to  levy  duties,  114  ; 
in  second  session  could  abate  duties 
on  all  crude  and  partly  manufac- 
tured articles,  71  ;  may  legislate 
"for  the  general  welfare,"  114  ;  of 
the  United  States,  power  possessed 
by,  258  ;  of  United  States  more 
supreme  than  Parliament,  1 17;  of 
1893,  conditions  it  will  meet,  124  ; 
Webster  never  dreamed  of  its  domi- 
nation by  Silver,  Pig-iron,  and 
Wool,  120 

Congressional  Record,  admirable  de- 
bates in,  263 

Contracts  in  gold  dollars,  meaning  of, 
207 

Co]5i)er,  United  States  deprived  of 
free  use  of  her  o\\n,  67 

Corn  laws,  repeal  of,  by  Peel,  36,  37 

Cost,  exam]iles  of  reduction  in,  with 
higher  rates  of  wages,  168  ;  of 
national  taxation  represented  in 
percentage  of  work,  8  ;  of  our 
labor  lowest,  rates  of  wages  highest, 

Cotton,  and  cotton  fibre,  Edward  At- 
kinson on,  145  ;  and  grain,  \Ne  pro- 
duce more  than  we  can  consume,  141 ; 
contrast  between  hand  and  machine 
labor  in,  165,  166;  dress-suit,  made 
wholly  in  one  day  from  field-cotton, 
165  ;  factories  fifty  years  ago,  167  ; 
factory  of  to-day  ;  product  greater, 
labor  less  arduous,  wages  higher 
than  fifty  years  ago,  167,  168  ;  -gin, 
invention  of,  led  to  spinning  and 
weaving,  51  ;  industry  later  than 
Hamilton's  tariff,  51  ;  lowest  prices 


ever  known  between  1S42-1846 
under  high  tariff,  4S  ;  low  prices 
under  the  Mc Kinky  tariff,  48  ; 
manufacture,  data  of,  computed  by 
Ivlward  Atkinson,  94  ;  manufacture 
developed  by  invention  of  cotton- 
gin,  147  ;  manufacture  exemplified 
at  Atlanta  Exposition,  165  ;  manu- 
facture of,  developed  subsequent  to 
1 791,  89;  manufacturing,  coarse, 
165  ;  plant,  value  of  root  of,  145  ; 
ties,  duties  on,  268 

Country,  prosperity  of,  will  be  cited 
by  ^lcKinleyites,  265 

Cow-pea  vine  a  renovator,  149 

Credit,  instruments  of,  liquidate  95 
per  cent,  of  purchases  and  sales, 
226 

Crude  and  ]iartly  manufactured  mate- 
rials, admitted  free  by  Great  Britain, 
173  ;  any  tax  upon,  a  serious  ob- 
struction, 62  ;  by  taxing  we  deprive 
ourselves  of  advantage  of  our 
smaller  army,  187  ;  duties  on,  27  ; 
duties  raised  upon,  in  tariff  of  1S46, 
268  ;  duty  may  be  removed  without 
injury,  126  ;  if  duties  were  removed 
from,  this  country  would  take  the 
lead,  92  ;  necessary  in  domestic 
manufactures  should  enter  free,  62, 
67  ;  necessity  of  exemption  from 
taxation,  274  ;  price  above  that  of 
other  countries,  29  ;  removal  of  tax 
on,  would  do  away  with  much  foreign 
com])etition,  98  ;  tax  on,  gives  ad- 
vantage to  foreign  consumer,  140 ; 
tax  on,  limits  production,  prevents 
exports,  burdens  commerce,  141  ; 
true  cost  of  tax  upon,  135  ;  untaxed 
in  Hamilton's  tariff,  47 

C'rude  theory  of  trade,  106 

Customs  laws  in  1797,  32 

Customs,  origin  of,  in  reign  of  Edward 
I.,  32  ;  revenue  for  iSgo-'gi,  12  ; 
revenue  from,  in  fiscal  year  ending 
June  30,  1891,  20,  21  ;  revenue, 
probable  excess  above  pensions,  21  ; 
revenue,  true,  19 


D 


Daily       Coiiiniercial     Bulletin,     Col. 
Wright's  Report  on  Wages  in,  20 


INDEX. 


281 


Dawes',  Senator,  definition  of  Protec- 
tion, 1 99 

Debit  side  government  account,  12 

Debt,  burden  of  European  nations, 
108  ;  public,  interest  on,  11 

Deep-Water  Ways  Convention,  ad- 
dress at,  by  George  II.  Ely,  137 

Democratic  party  of  to-day  a  party  of 
people,  259 

Democrats,   party  of    Tariff   Reform, 

275    .  , 

Despotism,  views  in  regard  to  State 
possession  of  property,  2 

Detroit,  Canadian  laborers  in,  199  ; 
tons  of  registered  shipping  passing 
city  of,  137 

Disadvantage,  our  relative,  in  cost  of 
iron  and  steel,  137 

Disparity  in  price  of  iron,  considered 
in  ratio  to  profits,  136  ;  greater  dis- 
advantage the  lower  the  price  is 
forced,  138 

Distribution,  importance  of  mechanism 
of,  152 

Distribidion  of  Products,  184 

Dollar,  gold,  weight  of,  233  ;  of  United 
States  compared  to  pound  sterling, 
218 

Dollars  and  Thakis,  207 

Domestic,  industry,  promotion  of, 
rests  upon  free  import  of  food  and 
crude  materials,  67  ;  manufactures 
should  be  promoted,  45  ;  traffic, 
magnitude  of,  137  ;  traffic,  vast 
volume  of,  compared  to  foreign, 
230 

Dutch,  the,  "  ate  the  whitest  bread  in 
Europe,"  231 

Duties,  compensating,  xii  ;  depress 
prices  of  materials  abroad,  27  ;  di- 
minish purchasing  power  of  other 
nations,  27  ;  impossible  to  adjust 
on  imports  by  rates  of  wages,  54 ; 
inflict  grave  injury  to  workmen,  28  , 
maintain  prices  on  crude  materials 
higher  here  than  abroad,  27  ;  on 
crude  materials  render  it  necessary 
to  grant  compensatory  duties,  28  ; 
progressive  reduction  of,  123  ;  pro- 
gressive reduction  on  finer  goods, 
128  ;  upon  articles  of  luxury,  26 

Dreihund  treaty  of  reciprocity  estab- 
lished, 174 


E 


Earnings,  actual  average  of  employees 

in  manufacturing  arts  in   1880,  94  ; 

average,  of  those  occupied  for  gain, 

3;    higher  than   ever  before,    215; 

relative,  200 
Eastern  States,  greater  wealth  not  due 

to  a  hit;h  tariff,  156 
Economists'    theories   compared    with 

facts,  160 
Edward     I.,     customs     originated    in 

reign  of,  32 
Eggs,  and  poultry,  proceeds  of  sales 

distributed  throughout  country,  50  ; 

computed  value  of,  in    the  United 

States,  50  ;  product  of  Ohio,  50 
Ely,  George  H.,  address  on  Domestic 

Traffic  given  at  Deep-Water  Ways 

Convention,  137 
Embargo,  result  of,  47 
Energy,    waste    of,    directed    towards 

support  of  army,  186 
England,  centre  of  world's  commerce, 

231  ;  purchasing  power  restricted  by 

our  tax  on  iron,  139 
European     countries,     machine-using 

States  import  food,    173  ;  rank  of, 

in  use  of  machinery,  170 
Europe,  product  deficient,  distribution 

bad,  I 84 
Excess,  grave  danger  of  slight,  which 

cannot  be  exported,  141 
Exchange    of   products    forbidden    by 

Protection,  79 
Executive  Department,  cost  of,  i  \ 
Exemption    of    crude    materials    from 

taxation    should    be    beginning    of 

tariff  reform,  146 
Expenditures,  lessening  year  by  year, 

ir  ;  normal,  of  government,  18 
Exports,  and  imports,  combined  sum 

of  our.  III;  to  Great  Britain,  excess 

over  imports,  218 
Export  stopped  by  high  tariff,  96 


Factory  system,  Webster  argues  that 
government  is  bound  to  sustain,  49 

Fallacious  ideas  of  "  paternalism  " 
traced  to  attempt  of  Congress  to 
regulate  wages,  58 


282 


INDEX. 


Families,  incomes  of  greater  number 
of,  227 

Family,  coiisisU  of,  200,  2ui  ;  normal, 
e\]>eiulitures  of,  2or 

Famine,  in  Europe,  effect  on  the 
United  States,  58  ;  in  Russia,  loS  ; 
Irish,  in  1846,  37 

Famine-stricken  Russia,  44 

Faneuil  Hall,  Webster's  speech  in, 
118 

Farmers',  Alliance,  demand  for  gov- 
ernment aid,  58;  and  cotton-growers, 
depression  in  price  of  products  of, 
142  ;  daughters,  earnings  in  cotton 
factories  fifty  years  ago,  167  ;  fiat- 
money  men,  213  ;  of  France  and 
Germany,  futile  attempt  to  protect, 
by  duties  upon  food,  174 

Farmer,  tax  on  tin-plates  works  great 
injury  to.  133 

Farm  products,  ]5rices  influenced  by 
obstruction  to  imjjorts,  67  ;  value  of 
imported,  small,  129 

Federal  government  has  no  constitu- 
tional power,  257 

Fiat,  dollars  not  wanted,  73  ;  -money 
men's  project,  213 

Fibres,  tonnage  moved  by  railways, 
221 

Finance,  and  taxation,  interest  of 
people  upon  questions  of,  274  ; 
Committee's  Report  on  prices  and 
wages,  viii,  262 

Finer  fabrics  may  be  taxed,  153 

Finished  ]jroducts,  discrimination 
necessary  in  duties  on,  270 

Fiske,  John,   on  higher  stage  of  bar- 
barism,  IO() 
'Florida    and    South    Carolina,    jihos- 
])hates  of,  149 

Flour,  grain,  and  milling,  no  foreign 
competition  in,  97 

Fluctuations  in  manufactures,  reasons 

for,  143 
Food,  and  fuel,  taxes  must  be  taken 
off,  61  ;  and  live  animals,  Class  A, 
duties  on,  12  ;  cost  of,  in  ratio  to 
proceeds  of  work,  149 ;  cost  one- 
half  jirice  of  life,  150;  deficient  in 
nutritive  power,  149  ;  duty  may  be 
retained  on  articles  of  luxury,  laT)  ; 
Europe's  ability  to  take  our,  depends 
on  her  mcaii^  of  ]>ayments,  142  ;  c\- 


penditures  for,  at  home  and  abroad, 

202  ;  fibres,  fabrics,  movement  of, 
224  ;  importance  of,  for  effective 
work,  175,  176;  imported  by  Euro- 
jiean  machine-using  States,  173  ; 
nitrogenous  element  supplies  muscu- 
lar energy,  176  ;  -problem  here  how 
to  stop  waste,  177  ;  -problem  in 
England,  and  other  European  coun- 
tries, 177  ;  product,  value  of, 
moved  by  railways,  222  ;  purchasing 
power  diminished  by  tariff  obstruc- 
tions, 139  ;  quality  must  be  right,  as 
well  as  quantity,  176  ;  relation  of 
cost  to  earnings,  179  I  shelter,  cloth- 
ing, final  end  of  life-work,  225  ; 
supply  assured  only  in  Great  Britain 
and  Holland,  174;  supply  comjiared 
to  fuel  of  steam  engine,  176;  supply 
compared  to  rate  of  wages,  177  ; 
waste  in  army  supply  of  nations 
compared,  178  ;  we  supply  ourselves 
with  double  product  at  half  cost  of 
European  countries,  150 

Forest,  value  of  products  of,  221 
Font  III,  The,  article  by  Edward  P. 
North  on  magnitude  of  domestic 
traffic,  137  ;  for  September,  1S91, 
condensed  accounts  of  nation  given 
in,  I,  42 
France,  and  Belgium,  their  facilities 
for  export  of  machine-made  goods, 

172  ;  15elgium,  Germany,  Holland, 
total  population  of,  185  ;  exports 
from,    182  ,    food    expenditure    of, 

203  ;  Germany,  Belgium,  Holland 
admit    crude  materials  nearly  free, 

173  ;  sometimes  dependent  upon 
other  countries  for  food,  174 

Free  coinage,  act  may  jiass,  229  ;  more 
disastrous  than  McKinley  tariff,  112  ; 
of  silver,  alliance  of  members  of 
both  parties  to  defeat,  71  ;  of  silver 
dollars  act  of  fraud,  213  ;  of  silver 
dollars  would  sliake  credit,  22  ;  of 
silver  w  ill  debase  standard  of  value, 
112  ;  when  safe,  208 

Free  conditions  of  exchange  i)romotc 
diversity  of  occupation,  54 

Free  Trade,  absolute,  among  the  people 
of  the  United  States,  52  ;  absolute, 
not  the  declared  motive  of  the  Demo- 
cinti':    pari),    73  ;    absolute,    would 


INDEX. 


283 


Free  Trade — Contijtucd. 

result  from  strict  interpretation  of 
Repul)lican  tariff  plank,  xvii  ;  all 
nations  profit  under,  yet  we  profit 
most,  55  ;  and  Sailors'  Rights,  47  ; 
application  of,  should  consider  ex- 
isting interests,  38  ;  a  principle, 
105  ;  attempt  to  attain,  by  devel- 
oping special  branches  has  failed, 
154  ;  Ihitish,  begun  under  Peel,  48  ; 
clubs,  bad  methoils,  264  ;  conti- 
nental system  of,  among  our  various 
States,  25,  42,  100,  276,  countries 
of  Europe  only  ones  in  wliich  full 
supply  of  food  is  assured,  174  ; 
defended  by  Webster,  Ii8  ;  defined 
by  Senator  Hoar,  80;  especially 
desirable  for  United  States,  107  ; 
founded  on  a  principle,  107  ;  in 
United  States  may  change  centre  of 
world's  commerce,  219  ;  our  country 
demands  to  be  governed  by  men  who 
represent,  no;  Peel  believes,  must 
be  introduced  gradually,  38  ;  pro- 
motes peace,  104  ,  requires  no  force, 
104  ;  road  to  like  road  to  virtue,  38  ; 
synonym  for  Liberty,  120  ;  tariff  of 
1846,  266  ;  the  objective  point,  69  ; 
the  right  of  every  citizen,  122  ;  ulti- 
mate object  of  the  advocates  of  Pro- 
tection, 74  ;  V^'ebster's  great  speech 
on,  47  ;  why  it  must  be  dealt  with 
as  a  policy,  264    265 

Free-trader,  principle  of,  defined  by 
Hoar,  81 

Freight  charges,  amount,  in 

French,  Revolution,  108  ;  soldiers 
fraternized  with  people,  igi  ;  thrift 
and  cjoking  skill,  191 

Furniture,  cost  in  i860  and  18S0,  168  ; 
we  excel  in,  97 


G 


Gain,  class  divisions  of  persons  occu- 
pied for,  in  1890,  4  ;  list  of  persons 
occupied  for,  as  given  in  census  of 
18S0,  4  ;  number  occupied  for,  3, 
43  ;  number  occupied  for,  in  18S0, 
53  ;  proportion  of  population  occu- 
pied for,  3  ;  total  number  occupied 
for,  in  Pennsylvania  in  1880,  56 

"General  welfare"  defined,  254 


George  IH.,  number  of  acts  relating 
to  imports  in  reign  of,  33 

German  government  teaclies  working- 
people  how  to  cook,  191 

Germans  under-fed,  109 

Germany,  and  the  Netherlands,  export 
of  machine-made  goods,  182  ;  cost 
of  work-ration  in,  190  ;  exports 
from,  1S2  ;  high  tariff  under  Bis- 
marck, 182  ;  people  almost  unfit  to 
work,  44  ;  under-fed  condition  of 
workmen,  203 

Gladstone  on  Peel's  Free-Trade 
measures,  38  ;  repeal  of  Navigation 
Laws,  37 

Glass  tumblers,  price  in  1860  and  1880, 
168 

Gold,  alleged  scarcity  of,  214  ;  and 
silver,  depreciation  of,  214 ;  and 
silver,  ratio  of,  214;  and  silver, 
substitution  of  instruments  of  credit 
therefor,  214  ;  bars  used  in  interna- 
tional commerce,  211  ;  basis,  prices 
and  wages  on  a,  23S  ;  basis,  result 
of  resumption  on,  239  ;  dollar  law- 
ful unit  of  value,  22S  ;  result  of 
premium  on,  239  ;  scarcity  of,  214  ; 
standard,  restoration  in  1879,  loi  ; 
standard.  United  States  should  ad- 
here to,  218 

Government,  aid  to  private  enterprises, 
robbery,  25  ;  cost  of,  could  be  met 
l)y  revenue  from  liquors  and  tobacco, 
244  ;  cost  of,  in  terms  of  work,  9  ; 
duty  "to  promote  the  general  wel- 
fare," 86  ;  ex|iendituresof,  for  fiscal 
year  ending  June  30,  1S91,  vi,  6,  7, 
II  ;  expenses  variable  but  continu- 
ous, II  ;  extraordinary  expenditures 
in  fiscal  year  ending  June  30,  1891, 
10;  normal  cost  of,  11  ;  of  United 
States  in  account  with  tax-payers, 
10;  receipts,  miscellaneous,  16; 
receipts,  total,  16  ;  service,  number 
of  persons  employed  in,  9  ;  should 
receive  all  taxes  paid  by  people,  46, 
153  ;  supjiort  of,  how  clerived,  6  ; 
total  cost  of,  12  ;  true  cost  of,  11 

Great  Britain,  admits  crude  materials 
free,  173  ;  and  Ireland,  facilities  for 
export  of  machine-made  goods,  172  ; 
Belgium,  tJermany,  iron  and  coal 
deposits  o{,  139  ;   huiden  in  support 


284 


IXDEX. 


(Ireat  Britain — Continued. 

of  navy,  187  ;  colonies,  exports 
valued  at,  1 10  ;  cost  of  labor  com- 
|)arecl  to  his/her  cost  of  iron  in 
United  States,  136  ;  dejjressini^ 
effect  of  taxes  on  products  in  1842, 
144  ;  expenditure  for  food,  203  ; 
exports  from,  consist  of  useful 
fabrics,    182  ;  Free-Trade   country, 

181  ;  in  1840,  35  ;  led  until  recently 
in  application  of  machinery  to  ]iro- 
duclion,  170;  lower  cost  of  pit;-iron 
to  consumers  in,  135  ;  our  principal 
customer,   271  ;    rates  of  wages  in, 

182  ;  what  has  given  control  in  trade 
to?  183 

Gross  ])roduct,  value  of  our,  224 


H 


Hamilton,  advocates  remission  of  duly 
on  cotton,  51  ;  and  Webster  on 
manufactures,  50 

Hamilton's,  list  of  manufactures,  con- 
clusions derived  therefrom,  146  ; 
policy,  47,  85  ;  Report  on  Manufac- 
tures, 86  ;  tarifTs,  rates  in,  47  ;  testi- 
mony as  to  early  manufactures,  89 

Hand-work,  and  machine-work  con- 
trasted, 160  ;  in  exchange  for  ma- 
chine-work, 175 

Harbors,  expenditures  for,  11,  go,  gi 

Harris,  Edward,  leads  argument 
against  wool  and  woollen  tariff,  63 

Hen-yard,  value  of  product  of,  150 

Higher  wages,  lower  cost,  examples  of. 

High  revenue  duties  justified  for  lim- 
ited period,  266 

High  tariff,  justified  only  by  those 
who  regard  commerce  as  war,  107  ; 
long  continued,  depresses  prices 
abroad,  makes  wages  uncertain  at 
home,  54  ;  present  system  should 
not  be  continued,  even  in  part,  156  ; 
system  merely  a  policy,  104 

High  wages,  and  low  prices  result 
of  low  cost  of  jjroduction,  i6g  ;  low 
cost  of  production  jiroved,  159 

Hoar,  Senator  George  F.,  defines 
Free  Trade,  80 

Holland,  exports  from,  182  ;  formerly 
typical  Free-Trade  country,  iSi 


Home  market,  danger  of  over-stock- 
ing, 141  ;  should  be  developed,  45 

Houscliold  appliances,  no  foreign 
conip'tition  in  making,  149 

House  of  Representatives,  next  candi- 
dates will  be  elected  on  platform 
of  tariff  reduction,  70 

House-room,  approximate  estimate  of 
cost  of  providing  for  increased,  151 

Houses,  manufacture  of,  number  of 
men  occupied  in,  151  ;  taxed  at 
every  point,   152 

Hume,  James  Deacon,  further  con- 
solidation of  customs  duties,  33  ; 
Josep!),  brings  about  first  step  in 
tariff  reform,  33 

Hume's  table,  logic  of,  converted 
Feel,  34 

Huskisson,  leads  measures  for  change 
in  tariff  laws  of  (ireat  Britain,  48  ; 
puts  wool  in  free  list,  33 


Imports,  and  exports  from  Great 
Britain,  271  ;  and  revenues  derived 
therefrom,  bad  form  of  annual 
statement,  34  ;  classified  by  Hume's 
Committee,  34  ;  dutiable,  increase 
in,  because  of  reduction  in  price, 
23  ;  of  finished  falirics  invited  by 
tax  on  crude  materials,  140  ;  paid 
for  by  our  exports,  gg 

Import  tax  not  a  burden  upon  other 
nations,  2 

Income,  and  expenditure  of  the  United 
States  stated  in  form  of  an  account 
current,  I  ;  of  Slate  derived  from 
taxation,  2 

Incomes,  average,  of  workmen  at 
home  and  abroad,  202  ;  proportion- 
ate, in  United  States,  204 

Income  tax,  becomes  surplus  when 
tax  on  crude  materials  is  removed, 
144  ;  unexpected  yield  in  Great 
Britain  from  Peel's,  36 

Increased  product  at  lessening  cost  by 
application  of  machinery,  161 

Independents  compared  to  Free 
Soilers,  259 

Independent  tariff  reformers,  work 
left  for,  xvii 

India,  competition  in  wlieal-growing 
with  Great  Britain,  joi 


INDEX. 


285 


Indians,  cost  of  support,  li 

Industrial  Progress  of  the  A^ation, 
184 

Industry,  domestic,  relief  to,  by  pro- 
posed abatement  of  duties,  23  ;  some 
minor  Ijranches  of,  /nay  have  been 
established  by  almost  prohibitive 
duties,  51 

Interior  Department,  cost  of,  11 

Internal  revenue,  tax  collected  on 
spirits,  tobacco,  liquors,  and  oleo- 
margarine, 15 

International  Commerce,  aggregate 
sum  given  in  States  man's  Year  Book, 
no;  its  amount,  210  ;  liquidated  in 
terms  of  j^ound  sterling,  212 

International,  imports  and  exports, 
211  ;  legal  tender,  effect  of  a  treaty 
of,  218  ;  tratfic,  our  proportion  of, 

137 
Iron,  actual  price  reduced  from  1880- 
1890,  136  ;  price  lower  abroad,  be- 
cause of  obstruction  to  our  demand. 

Iron  and  coal,  Great  Britain's  posses- 
sion of  deposits  of,  183  ;  mines  of 
Pennsylvania,  workers  in,  130  ;  su- 
premacy in  production  of,  now  be- 
longs to  United  States,  183 

Iron  and  silver  give  occupation  to 
very  few,  50 

Iron  and  steel,  effect  of  disparity  of 
price  on,  140  ;  effect  of  same  price 
in  this  country  and  abroad,  137;  pro- 
ducers' profits  due  to  control  of 
patents,  156 

Iron  industry,  no  great  fluctuations  if 
crude  materials  were  free,  138  ; 
plea  upon  which  tariff  measures 
prior  to  1861  were  supported,  49  ; 
true  Protection  to  domestic,  how 
attained,  138 

"  Iron  law  of  wages"  wrong  in  free 
country,  191 

Iron  masters,  in  Pennsylvania,  mag- 
nificent incomes  of,  36  ;  large  profits 
of,  29 

Iron  miners  and  workmen,  beggarly 
wages  of,  36 

Iron  ore  and  coal,  in  South  need  no 
protection,  156  ;  of  Maritime  Prov- 
inces, 129  ;  our  supremacy  in  prod- 
uct of,  14S 


Iron  ore,  cost  of  labor  in  each  ton,  36 ; 
duty  on,  must  be  removed,  xiv ; 
foreign,  duty  on  import  of,  36  ;  im- 
port of  ore  from  Spain  and  Cuba 
helps  domestic  ores,  94  ;  number  of 
persons  employed  in  1890,  93  ;  pro- 
tection invoked  in  behalf  of  mining, 

93 

Iron  ores  of  Germany,  "  basis  process, " 
182 

Iron,  pig-,  wool,  and  silver  now  con- 
trol legislation  of  country,  49 

Iron  rails  and  bars,  disparity  in  price 
of  computed,  136 

Iron,  sheet,  evil  effect  of  tax  on,  135 

Iron,  sheet,  rolled,  tin-plates,  etc., 
effect  of  reduction  in  prices  of 
metals  abroad  upon  production  of, 

Italy,  Austria,  Hungary,  Spain,  Portu- 
gal, not  effective  competitors  in  ap- 
plication of  machinery,  173 

Italy,  devastated  by  pellagra,  due 
to  insufficient  food,  44  ;  food  con- 
ditions in,  203 


J 


Jackson's,  General,  declaration  in  favor 

of  Protection,  82 
Jevons'  list  of  Prices,  214 
Judiciary,  cost  of,  it 
Justice,  Department  of,  cost,  12 


Labor  cost  and  duty  on  iron  ore  equal, 
36 

Labor  cost,  investigated  by  Carroll  D. 
Wright,  viii  ;  not  dependent  on 
rates  of  wages,  51,  252  ;  of  ma- 
terials, absurd  to  set  compensatory 
duty  for,  xiii 

Labor,  Department  of,  cost  of,  il 

Laborer,  American,  superior  to  under- 
fed "pauper  laborer"  of  Euro]ie, 
68  ;  earnings  of  common  and  skilled, 
since  1880,  95 

Labor,  per  cent,  of,  in  woollen  and 
worsted  manufactures,  91  ;  wages 
of,  have  risen,  228 

Labor-saving  processes  in  United 
States,  171 


286 


INDEX. 


Lasallc,  "  iron  law  of  wages,"  191 

Lawrence,  Abbott,  took  part  in  Free 
Trade  meeting,  47 

Leader  wanted  to  do  for  America 
what  I'eel  did  for  England,  36 

Leech,  Edward  O.,  tables  of  values 
of  foreign  coins,  236,  237 

Legal  tender,  act,  how  conceived,  213; 
no  international  act  of,  2iu  ;  no  need 
of  act  of,  211  ;  not  missed  in  inter- 
national commerce,  212  ;  power  of 
act  of,  208 

Legislative,  body  has  no  right  to 
force  circulation  of  coins  of  unequal 
value,  213  ;  department,  cost  of,  11 

Legislature  of  New  York  attempts  to 
interfere  with  freedom  of  trade,  120 

"  Liberal  appropriations"  by  Congress 
advocated  by  unthinking  men,  I 

Liberty,  as  useil  in  Constitution,  i2o  ; 
defined  by  Judge  Peckham,  120 ; 
defined  by  Webster's  Dictionary, 
121 

Life-ration  in  Boston,  1S9 

Life-work  consists  of  conversion  of 
force,  225 

Liquors  and  tobacco,  increase  in 
government  revenues  from,  275  ; 
revenue  from,  suffices  for  all  govern- 
ment expenses,  except  pensions,  71  ; 
revenue  from,  18,  244 

Loan  Association  vs.  Topeka,  24,  116, 
185,  255, 258  _ 

London,  and  Liverpool,  tonnage  be- 
tween, surpassed  by  shipping  on 
Great  Lakes,  137  ;  and  Paris,  price 
of  work  ration  in,  190 

Londott  Times  refuses  to  jirint  Mr. 
Atkinson's  letter  on  price  of 
wheat,  loi 

Louisiana  sold  to  United  States,  108 

Lowell  t'j.  Boston,  115    255 

Lumber  and  wood-working,  97 

Luxuries,  etc.,  duties  on  (Class  E),  14 


M 


McCulloch's,  Hon.  Hugh,  attention 
called  to  bad  form  of  our  tarilT 
acts,  also  statement  of  imports  and 
revenue,  34 

McCullough  vs.  State  of  I\Iar\lan(l, 
255 


Machinery,  ap])lication  of,  to  produc- 
tion greatest  in  Great  Britain  until 
recently,  170;  applications  of,  to 
production  juslifieil,  159  ;  competi- 
tion in  su|iply  of  fabrics  made  by, 
171  ;  increased  cost  of,  128  ;  our 
export  of,  138  ;  penal  offence  for- 
merly to  take  drawings  of,  out  of 
Great  Britain,  50;  tools,  demand  for, 
140  ;  wliy  we  cannot  export  to  Asia, 
Africa,  and  South  America,  137 

Machine-using  populations  of  Europe, 

171 
McKay  Sewing  Machine,  revenue  de- 
rived from  work  of,  in  Europe  only 
two-thirds   that   of   United   States, 

187 

McKinley  act,  and  reciprocity,  72  ; 
answers  from  several  of  its  leading 
supporters,  80;  atlemiiteil  exclusion 
of  goods  a  failure,  124  ;  contains 
germs  of  its  own  destruction,  vii.  ; 
defence  of,  by  law  officers  of  gov- 
ernment, 258  ;  does  it  protect  in- 
dustry of  this  country?  xi ;  double 
[lurpose  of,  118  ;  effect  of,  upon  our 
commerce  with  Canada,  193  ;  first 
step  for  repeal  of,  xi  ;  has  no  intel- 
lectual standing,  241  ;  inconsistent 
with  Republican  resolution,  xiii  ; 
is  the  scorn  and  contempt  of  a  large 
ininority  of  those  who  voted  for 
it,  24  ;  its  purpose  cannot  be  real- 
ized, 123  ;  low  prices  of  cotton  now 
under  the,  48  ;  protection  under,  is 
really  privation,  122  ;  public  dis- 
trust of  conceptions  culminating  in, 
109  ;  Republican  objections  to,  70  J 
will  destroy  I'rotection,  146 

McKinley  bill,  alleged  careful  con- 
sideration of  comparative  cost  of 
making  iron  and  steel  at  home  and 
abroad,  xv. ;  one  merit,  25  ;  sup- 
ported as  a  ])arty  measure,  57 

McKinley  cases  before  Supreme 
Court,  258 

McKinleyism,  a  blunder,  275  ;  advo- 
cates of,  impute  welfare  of  this 
country  to  olistruction  of  imports, 
230  ;  and  Protection,  45  ;  doctrine 
of  "  protection  with  incidental 
revenue,"  36  ;  German,  Cajirivi's 
verdict  upon, 174;  itb  predecessor,  47 


INDEX. 


!87 


McKinley  pebble,  230 

McKinley  tariff  bill,  advances  prices 
of  tin-plales,  65  ;  committed  Re- 
publicans to  Protection,  250  ;  falla- 
cious expectation  of  bounties  held 
out  by,  129  ;  intellectual  capacity  of 
its  advocates,  59  ;  is  being  rapidly 
condemned,  59  ;  stupendous  blun- 
der,  109 

McKinley,  Wm.,  Jr.,  comprehension 
of  tariff  question,  xi  ;  effect  of  his 
tariff  upon  Oswego  trade,  197  ;  fails 
to  answer  question,  81  ;  framer  of 
tariff  bill,  250 

McMillin,  Jjenton,  work  on  Mills' 
Tariff  Bill,  69 

McPherson,  Senator,  effect  of  Mc- 
Kinley Act,  193 

Manning,  Secretary,  classification  of 
annual  accounts,  35 

Manufactured,  articles.  Class  D, 
duties  on,  14  ;  goods,  labor  cost  of, 
xii 

Manufactures,  depressed  in  Great 
Britain,  33  ;  established,  list  of, 
given  in  Hamilton's  Report  on,  88, 
89  ;  fluctuations  in,  reasons  for, 
142  ;  Hamilton's  Report  on,  86  ; 
mechanics  and  mining,  number  oc- 
cupied in  1880  in,  91  ;  mechanic 
arts  and  mining,  three-fourths  of 
products  from,  could  not  be  im- 
ported, 55  ;  not  a  single  important 
branch  not  established  before  1791, 
89  ;  of  United  States,  Hamilton 
and  Webster  on,  50  ;  our  ex- 
ports increasing,  270  ;  statistics 
of,  given  in  census  reports, 
93  ;  very  few  branches  in  \vhich 
any  foreign  competition  could  exist. 

Manufacturing,  and  mining,  rapid 
growth  in  South  since  slavery  was 
renioved,  54  ;  arts  established  by 
1791  noted  in  Hamilton's  Report, 
87  ;  mechanic  arts  and  mining, 
number  employed  in,  53  ;  number 
of  persons  occupied  in,  according 
to  census  of  1880,  94 

Maritime  provinces,  duty  on  iron  ore 
and  coal,  129 

Market,  better  in  United  States  f.r 
Canadian  products,  194 


Marshall's,  Chief-Justice,  decision  as 
to  power  of  Congress  to  incorporate 
a  bank,  255 

Massachusetts  and  Canada,  fence  be- 
tween, should  be  lowered,  199 

Merchandise,  value  of,  moved  by 
railways,  220 

Metal  and  mine  products,  little  for- 
eign competition  in,  92 

Metz,  siege  of,  victory,  how  attained, 

179 

Militarism,  disadvantages  of,  185 

Milk,  condensed,  Switzerland's  large 
foreign  export  trade,  133 

Miller,  Hon.  W.  H.  H.,  and  Hon.  W. 
H.  Taft's  briefs  on  sugar-bounty, 
254  ;  Judge,  Miller,  on  power  of 
taxation,  vi  ;  Justice,  establishes 
limits  of  taxation,  24  ;  Justice,  rul- 
ing before  Supreme  Court,  257 ; 
ruling  in  Loan  Association  vs. 
Topeka,  116 

Mills  bill,  xii,  69  ;  attempt  to  reform 
war  tariff,  24  ;  review  of,  sent  by 
Hon.  Thomas  B.  Reed,  83 

Mills,  Roger  Q.,  work  on  Mills  tariff 
bill,  60 

Miners,  and  laborers  in  furnaces  earn 
barely  enough  to  support  life,  29; 
iron,  of  Pennsylvania,  wages  in  last 
census  report,  30 

Mining,  low  rates  of  wages  in,  50; 
number  of  persons  occupied  in, 
insignificant,  93 

Moltke,  von,  chief  work,  179 

Money,  coin  or  paper,  scarce  in  sec- 
tions, 215  ;  good  and  bad,  209  ;  of 
redemption  necessary,  209  ;  paper, 
must  be  redeemable  on  demand  in 
coin,  210  ;  quality  should  be  assured, 
217;  standard  of  true,  241 

Moral  obligations  of  Government,  116 

Morrill,  Senator,  upon  McKinley  act, 
193  ;  upon  the  labor  question,  197 

Morrison  bill,  xii 

Municipal  taxation  must  be  for  jniblic 
municipal  purposes,  115 


N 


Napoleon,  compelled  to  sell  Toiiisiana 
to  this  country,  108  ;  imposed  debt 

u.i  Holland,   X8l 


288 


INDEX. 


National,  Bank  Act,  limitations  of, 
215  ;  debts,  European,  188  ;  debts, 
Uniuil   States,    189 

Nationalism,  views  in  regard  to  State 
possession  of  properly,  i 

Nations  classified  in  application  of 
machinery  to  production,  172 

Nature,  less  the  gratuities,  more  pros- 
perous the  people,  157 

Naval  vessels,  expenditures  for,  1890, 
1891,  II 

Naxigation  Law s,  repeal  of,  37 

Nav)',  burden  of  Great  Britain's 
enormous,  183  ;  cost  of,  11  ;  Cjreat 
Britain's  buideu  in  support  of,  187 

Necessaries  of  life,  price  of,  214 

New  England,  farmers'  daughters  in 
cotton  factories,  167  ;  would  be 
richer  if  Aw\\^^  for  revenue  otily  had 
been  imposed,  156 

New  Hampshire,  address  before 
United  Boards  of  Trade,  157  ; 
Canadian  laborers  in,  198 

New  York  and  Pennsylvania,  wheat 
production  in,  164 

Nitrogen,  deficiency  of,  in  food  of 
the  masses,  186  ;  means  power  of 
work,  176 

Noble's  Fiscal  Legislation  of  Great 
Britain,  33 

Non-machine-using,  nations,  compe- 
tition in  supply  of,  171  ;  nations, 
why  we  cannot  supply,  136  ;  people, 
number  who  want  cotton,  48 

Norman's,  J.  H.,  The  World's  Ex- 
changes, 233 

North,  lulward  P.,  on  magnitude  of 
domestic  traffic,  137 

Nutrients  must  be  in  right  proportion, 
176 

Nutrition,  comparative,  of  countries 
and  States,  189  ;  writer  has  lately 
made  study  of,  179 


o 


Occupations,  analysis  of,  in  regard  to 
foreign  competition,  98  ;  developed 
mostly  without  tariff  interference, 
163  ;  natural  diversity  establishes 
itself,  52  ;  of  people  of  the  United 
States  as  listed  in  census  of  1880, 


53 


Officers,  assistant,  salaries  of,  41  ;  of 
governments,  subordinate,  excellent 
work,  meagre  jjay,  39  ;  total  ])ay- 
ment  of  sixty-foui  chief,  41;  United 
States,  beggarly  compensation  of,  39 

Ohio,   occupations  of   the  people  of, 

56 
"  Osnaburgs,"  manufactured  in  Soutli, 

Oswego,  milling  trade  dcitroyed  l)y 
our  tariff,  196,  197 


Pacific  R.  R.,  interest  on  bonds  ad- 
vanced by  government,  1 1 

Parliament,  methods  of,  better  than 
our  administration,  262 

Partly  manufactured  articles  could 
soon  be  put  in  free  list,  23 

Party  methods  of  tariff  discussion  bad, 
262 

Paternal  policy  no  longer  to  be  toler- 
ated, 58 

"  Pauper  laborers,"  deficient  in  nitro- 
gen, 176  ;  ill-fed  labor,  176;  mystery 
disclosed,  186;  of  Canada  in  com- 
petition with  New  England  labor, 
199 

Peas,  beans,  cheese,  consumed  to 
supply  nitrogen,  190  ;  sujjpl)-  nitro- 
gen, 17G 

Peel,  Sir  Robert,  conversion  to  tariff 
reform,  his  reasons  given,  38  ;  con- 
verted by  Hume's  table,  34  ;  ex- 
ample to  be  followed  by  United 
States,  127  ;  first  great  measure  for 
reform  of  British  tariff,  32  ;  first 
measure  of  tariff  reform,  36  ;  insti- 
tutes beginning  of  British  Eree 
Trade,  48  ;  leader  like,  wanted  in 
America,  36  ;  leaves  oflice,  but 
tariff  reform  continues,  37  ;  name 
will  be  honored  on  account  of  un- 
taxed food,  37  ;  removal  of  taxes  on 
crude  materials,  144  ;  rule  laid 
down  by,  for  selection  of  subjects 
of  taxation,  125  ;  second  great  act 
of  tariff  reform,  37  ;  speech  on  leav- 
ing office  in  1847,  36;  speech  on 
presenting  first  measur'.s  for  tariff 
reform,  35 

Pellagra  devastates  Italy,  44,  109 


INDEX. 


289 


Pensions,  Commissioner  of,  testimony 
touching  their  highest  point,  71  ; 
Commissioner  of,  views  as  to  future 
liabilities,  71;  cost  of  first  payments, 
10  ;  estimated  by  Secretary  of  the 
Treasury,  21  ;  in  1893,  124  ;  neces- 
sity of  careful  estimc'cT  of  expendi- 
tures for,  60  ;  roll,  cost  of  recurrent 
payments,  n  ;  to  be  paid  from  cus- 
toms revenue,  19 

People,  mass  of,  will  insist  upon 
honest  dollar,  22g  ;  move  slowly 
but  surely.  24 

People's  will  that  taxation  shall  be 
reduced,  24 

People,  will  support  right  policy,  275  ; 
vs.  Gilson,  120 

Pig-iron,  additional  annual  cost  paid 
by  United  States  as  compared  to 
Great  Britain,  64  ;  American  con- 
sumers of,  price  paid  above  foreign 
consumers,  135  ;  and  steel  made 
at  least  cost  here,  xv  ;  and  wool, 
European  consumers  given  advan- 
tage by  our  tax,  196  ;  average  price 
of,  kept  above  price  in  other  coun- 
tries, 2g  ;  disparity  in  cost  of,  to 
American  consumers  computed  by  , 
David  A.  Wells,  29  ;  duty  upon, 
must  be  removed,  xv  ;  lower  cost 
to  consumers  in  Great  Britain,  Ger- 
many, Belgium,  135  ;  protection  of, 
64  ;  value  at  furnace,  49  ;  wool, 
silver,  production  insignificant,  50  ; 
Wool, Silver, Unholy  Alliance  of, 173 

Pine  boards,  effect  of  duties  on,  195 

Pitt,  William,  act  for  consolidation  of 
duties,  32 

Policy,  Webster's  definition  of,  76 

Poor,  H.  v.,  on  value  of  goods  moved 
over  railways,  223 

Postal,  deficiency,  11  ;  service,  reve- 
nue from,  15 

Potatoes,  duty  upon,  must  be  re- 
moved, xiv  ;  unjust  tax  on,  62 

Poultry  and  eggs,  value  of,  49 

Pound  sterling,  international  com- 
merce liquidated  in,  212  ;  and  sov- 
ereign defined,  210 

Pounds,  troy  and  avoirdupois,  analogy 
to  gold  and  silver,  207 

Poverty    of     workingmen    of     Great 
Britain,  remedy  proposed  for,  35 
'9 


Prices,  and  wages.  Senate  investiga- 
tion of,  262  ;  evil  effect  of  relatively 
higher,  x  ;  lower  in  United  States, 

215 

Principle,  and  policy  contrasted,  76  ; 
defined,  212  ;  of  Protection,  80, 
257  ;  policy  of  country  must  become 
adjusted  to,  75  ;  Webster's  definition 
of,  76 

Product,  annual,  result  of  annual 
work,  2  ;  depleted,  work  increased, 
by  consumption  of  armies,  43  ; 
gross,  of  United  States,  219  ;  in- 
creased by  invention,  163  ;  increase 
of,  brings  excess  to  be  saved,  162  ; 
joint,  value  of,  estimated,  5  ;  of 
United  States,  no  ;  result  of  work, 
184  ;  rule  for  distribution  of,  6  ; 
worth  of  average  annual,  4 

Production,  low  cost  of,  results  in  low 
prices  and  high  wages,  169 

Products,  distribution  of,  false  in 
United  States,  25  ;  distribution  of, 
various  methods,  2 

Professional  and  personal  service, 
number  employed  in,  53 

Profits,  margin  of,  in  Canada,  195 

Profit,  trade  depends  on  small  margin 

of,  133 ; 

Progress,  of  country  depends  upon 
application  of  science  and  inven- 
tion, 100  ;  of  this  country  in  ma- 
terial welfare,  57 

Prosperity,  of  United  States  not  due 
to  high  tariffs,  99  ;  which  will  ensue 
from  reduction  of  duties  will  in- 
crease consumption,  127 

Protected  industries,  few  in  number, 
147  ;  give  neither  higher  wages  nor 
greater  profits,  147  ;  greater  fluctua- 
tion, more  foreign  labor  in,  99,  147, 
148 

Protection,  advocates  of,  formerly  sup- 
ported it  as  a  temporary  policy  pre- 
paratory to  Free  Trade,  61  ;  a  fence, 
199  ;  and  Free  Trade  represent  the 
same  purpose,  74  ;  a  fotirv,  not  a 
principle,  83,  84  ;  artificial  govern- 
ment, injurious,  119  ;  defence  of 
policy  rests  wholly  upon  erroneous 
assumption  in  regard  to  rates  of 
wages,  84  ;  defined,  79  ;  does  not 
diversify     industry,    89  ;    does    not 


290 


INDEX. 


Protection — Continued. 

raise  wages,  93  ;  given  up  hy  Great 
Hrilaiii  under  pressure  of  pauperism, 
32  ;  lias  reached  its  destruction  in 
McKinley  act,  145  ;  how  will  it  be 
most  fully  assured  ?  265  ;  is  claimed 
to  be  a  principle,  79  ;  makes  more 
work;  object  of  science  to  save  work, 
154  ;  "  Principle  of,"  72  ;  principle 
of,  defined  by  Senator  Aldrich,  82  ; 
principle  of,  defined  by  Senator 
Hoar,  81  ;  Professor  Thompson's 
letter  on,  85,  86  ;  promotes  war,  104  ; 
purpose  of,  to  raise  rate  of  wages 
and  divert  capital,  104  ;  really  priva- 
tion, 107  ;  "  reasonable  measure  of," 
required  by  infant  manufactures,  51 ; 
reasons  why  it  is  logically  wrong, 
146  ;  to  domestic  industry,  how 
assured,  xi  ;  to  domestic  industry 
will  consist  in  free  men,  free  soil, 
free  speech,  and  Free  Trade,  68  ;  to 
manufactures,  chief  argument  for, 
has  been  high  rates  of  wages  in  agri- 
culture, 100  ;  under  pretext  of,  any 
Congress  can  tax  all  persons  for 
benefit  of  single  class,  117  ;  what  is 
it  ?  45  ;  what  is  the  principle  of  ?  80  ; 
"with  incidental  revenue,"  72,  118; 
"  with  incidental  revenue  "  impossi- 
ble, 123;  "  with  incidental  revenue," 
object  of  McKinley  bill,  251 ;  "with 
incidental  revenue  "  the  nem  pur- 
]iose  of  McKinleyism,  78  ;  vs.  Free 
Trade,  264 

Protective,  duties  protect  only  in 
periods  of  short  crops  in  other 
countries,  174  ;  duty  leads  to  over- 
production, 113;  policy,  one  pro- 
fessor sustains,  85  ;  side,  bad  meth- 
ods of,  264  ;  system,  beginning  of, 
86  ;  system  culminates  in  disaster, 
1840,  in  Great  Britain,  25  ;  system 
destroys  trade,  34  ;  system  in  Great 
Britain  culminates  in  desperate  con- 
<litions  in  1840,  35  ;  system,  objec- 
tive point  ultimate  Free  Trade,  72  ; 
tariff,  efTect  of,  exaggerated,  95  ; 
tariff,  evil  efTect  of,  obstruction  to 
trade,  95  ;  tarifl  restricts  rather  than 
promotes  diversity  of  occupation, 
51  ;  tariflf  stimulates  few  industries, 
95 


Proteids,  how  derived,  176 

Public,  buildings,  expenses  of,  in 
1890,  1891,  n  ;  good  should  be 
considered  in  framing  a  tariff 
bill,  46  ;  opinion  on  tariff,  change 
in,    58 

"  Public  purpose  "  defined,  255 


R 


Railway-freight  traffic,  increase  in, 
216 

Railway  Manual,  The,  value  of 
goods  moved  over  railways  given 
in,  223 

Railways,  number  of  miles  constructed 
annually,  152 

Rate  of  wages,  high  in  United  States, 
cost  of  production  low,  54  ;  not  a 
sure  standard  of  cost  of  labor,  54 

Rates  of  wages,  advance  in  unpro- 
tected arts,  proves  that  our  pros- 
perity does  not  depend  on  tariff, 
100 

Ration  of  German  soldier  in  active 
service,  189 

Rations,  cost  abroad,  202  ;  cost  of,  in 
Berlin,  202 

Ration-work,  price  of,  in  Michigan, 
Iowa,  and  Nebraska,  190 

Receipts,  what  the  miscellaneous  per- 
manent consist  of,  18 

Reciprocal  Free  Trade  between  Great 
Britain,  Canada,  and  United  States, 
future  of,  188 

Reciprocity,  additional  treaties  of, 
275  ;  DreihiiUil,  treaty  established, 
174 ;  in  trade  between  Austria, 
Italy,  Germany,  Switzerland,  Bel- 
gium, 44  ;  Republican  measures  for, 
72  ;  treaties  between  Germany,  Aus- 
tria, and  Italy,  105 ;  works  for  peace, 
44  ;  with  Canada,  lOg 

Reductions  in  duty  under  last  tariff 
bill,  19 

Reed,  Thomas  B. ,  cannot  state  "  Prin- 
ciple of  Protection,"  83 

Religious,  commercial,  wars  com- 
pared,  108 

"  Report  on  Manufactures,"  116 

Republican,  party,  view  of  bounties, 
258  ;  platform,  tariff  plank  in,  251  ; 
tariff  plank  revolutionary,  xvii 


INDEX. 


291 


Republicans,  and  Democrats  differ 
merely  as  to  time  and  method  of 
tariff  reform,  61  ;  should  be  com- 
pelled to  adhere  to  terms  of  resolu- 
tion, xii 

Revenue,  cost  of,  derived  from  taxa- 
tion on  articles  of  common  con- 
sumption, 6  ;  derived  from  taxes  on 
crude  materials  could  be  spared,  143; 
derived  from  taxes  on  crude  prod- 
ucts, 143  ;  derived  from  taxing  crude 
materials,  143  ;  duties  will  increase 
with  increase  of  consumption,  31 ; 
ends  where  Protection  begins,  117  ; 
excess  constant  source  of  danger,  46; 
excess  from  liquors  and  tobacco  in 
1893  and  1894  will  suffice  to  cover 
increase  in  pensions,  22  ;  excess 
from  liquors  and  tobacco  in  1893 
may  be  applied  to  pensions,  125  ; 
from  liquors  and  tobacco,  18  ; 
from  liquors  and  tobacco  exceeds 
disbursements  for  civil  service,  17  ; 
from  liquors  and  tobacco  in  1893, 
125  ;  from  liquors  and  tobacco, 
1871-1891,  19  ;  from  miscellaneous 
permanent  receipts  exceeds  interest 
on  public  debt,  17  ;  from  perma- 
nent receipts,  liquors  and  tobacco 
sufficient  to  cover  all  government 
expenses,  except  pensions,  17  ; 
ignored  in  Republican  tariff  plank, 
251  ;  increased  from  advance  in 
rates  on  tin-plates,  wool,  and 
machinery,  20  ;  necessity  for,  hence 
necessity  for  tax,  74  ;  principal 
source  of  government,  17  ;  proba- 
ble excess  in  1892,  19  ;  probable 
excess  of,  22  ;  probable,  from 
liquors  and  tobacco  in  fiscal  year 
ending  June  30,  l8g2,  ig ;  pub- 
lic, siiould  be  limited  to  neces- 
sary expenses  of  Government,  46  ; 
sutficient  for  pension  roll  can 
be  derived  by  taxing  luxuries, 
127 

Rhenish  Prussia,  cost  of  production 
of  wheat  in,  102 

Rich,  enabled  to  pick  pockets  of  poor, 
213  ;  rich  richer,  poor  poorer  under 
British  protective  system,  36 

Rivers,  expenditures  for,  in  1S90, 
1891,  II 


Robbery,  legal,  done  under  forms  of 
law,  and  called  taxation,  117 

Russia,  famine-stricken,  44,  109  ; 
starving ;  evil  effect  of  tax  on 
sheet-iron,  135  ;  Sweden,  Norway, 
non-competitors  in  supplies  to  non- 
machine-using  nations,  173 

Russia's  position  in  use  of  machinery, 
171 


Salaries  of  chief  United  States  officials 
and  assistants,  40 

Sault  St.  Marie  Canal,  traffic  now 
exceeds  traffic  of  Suez  Canal,  108, 
152 

Sausage,  German,  importance  of,  179 

Savings-banks,  profit  secured  to  fac- 
tory operatives  by,  157 

Science  and  invention,  effective  ap- 
plication of,  172 

Scrip,  use  of,  207 

vSedan,  victory  at,  179 

Self-binder  and  reaper  reduces  price 
of  harvesting  wheat,  loi 

Senate,  Finance  Committee,  report 
on  income  and  expenditures,  201  ; 
ne?<t,  will  probably  sustain  judicious 
method  of  taiiff  reduction,  70 

Senators  and  Members  of  Congress, 
beggarly  compensation  of,  39 

Sheeting  standard,  wages  fifty  years 
ago  and  to-day  compared,  167 

Shelter  of  our  people,  manufacture  of 
buildings,  151 

Sherman,  bill  will  probably  be  re- 
])ealed,  250;  Senator  John,  defines 
the    "  Principle  of  Protection,"  82, 

Ship-builders,    machinists,    etc.,    our, 
forbidden     to     compete     on     even  ^ 
terms,  140;  our,  hindered,  139 

Shipping  on  Great  Lakes  surpasses  in 
tonnage  that  between  London  and 
Liverpool,  137 

Shoddy-cloth  mills  replace  milling 
w  heat  urider  McKinley  act,  197 

Silks,  woollens,  and  cottons,  increase 
of  duties  on,  254 

Silver,  agitation  caused  by  difficulty  in 
sales  of  excess  of  farm  products, 
142  ;  bi-metallism  and  free  coinage, 


292 


INDEX. 


Silver — Continued. 

205  ;  bullion,  price  affected  by  tax, 
247  ;  bullion,  price  of,  238  ;  bullion, 
price  )^aicl  for  purchase  of,  239  ; 
bullion  purchase,  taxation  for,  8  ; 
dollar  compared  to  gold,  209  ;  dol- 
lar, its  worth,  2og  ;  dollar,  present, 
bad  money,  241  ;  dollar,  present 
value,  238  ;  dollars,  free  coinage  of, 
would  imperil  unit  of  value,  244  ; 
dollars,  how  maintained  at  parity 
with  gold,  244  ;  dollars,  result  of 
free  coinage  of,  228  ;  foreign  de- 
mand, how  met,  245  ;  free  coinage 
of,  absurd  argument  of  advocates  of, 
238  ;  free  coinage  would  endanger 
commerce,  219  ;  mines,  men  of  both 
parties  unite  to  defeat  efforts  of 
owners  of,  ir3  ;  mines,  petty  prod- 
uct of,  219  ;  -mining States,  demand 
of,  240  ;  pig-iron,  and  wool  dominate 
Congress,  120 ;  question  discussed 
before  the  British  Association  in 
1887,  100  ;  question,  division  upon, 
not  a  party  one,  250  ;  result  of  free 
coinage  of,  239  ;  result  of  tax  upon, 
proposed  by  Chauncey  Smith,  245  ; 
standard,  result  of  single,  244  ; 
value  of,  49  ;  why  should  it  not  be 
taxed  ?  244 

Sinking-fund  act  a  juggle  in  book- 
keeping, 20 

Slaughtering  and  meat-packing,  97 

Slavery,  value  of  the  abolition  of, 
148 

Smith's,  Chauncey,  project  for  main- 
taining silver  at  parity  with  gold, 
242  ;  testimony  upon  superior  pro- 
tluctive  power  of  American  work- 
man, 186 

"Smothered  in  our  own  grease,"  58, 

.  1:19. 

Socialism,  mild,  views  in  regard  to 
State  possession  of  property,  i 

Socialistic  or  communistic  acts  limit- 
ing hours  of  labor  or  methods  of 
payment,  104 

Soldiers'  Homes,  support  of,  11 

Solicitor-General,  salary  of,  40 

Southern  States,  no  protection  required 
for  mining  ore  or  establishment  of 
textile  factories,  148 

South,  needs  of,  to-day,  209 


Sovereign,  weight  of,  233 

Specie  payment,  resumption  of,  228 

Standard  of  value,  danger  of  impair- 
ing, 205 

Standing  army  of  United  States, 
187 

State,  Banks'  tax,  217  ;  Department, 
cost  of,  II  ;  possesses  no  property 
but  public  buildings  and  public 
lands,  2 

Statesman's  Year  Booi  ior  i&gi ,  no; 
1892,  185 

Statistical  data,  value  of,  in  Vol.  XX, 
census  of  1880,  167 

Statistics  of  manufactures  found  in 
census,  96 

Steel,  abnormal  profits  in  manufacture 
of  Bessemer  ftot  due  to  protection, 

99 

Suez  Canal,  trafific  compared  to  Sault 
St.  Marie  Canal,  108,  152 

Sugar,  added  to  free  list,  62  ;  -bounty 
clause,  argument  for,  1 14;  duties 
have  always  had  effect  of  bounties, 
116  ;  heavy  investments  in  plant, 
116  ;    -planters,    bounty     to,    253, 

254 

Summary  of  Chapters  I-XXIV,  181 

Supreme  Court,  defines  principle  of 
taxation,  24  ;  judges,  salary  of,  40  ; 
justifies  protective  tariff,  114;  no 
longer  a  co-ordinate  branch  of  gov- 
ernment, 117 

Surplus,  writer's  estimate  of,  differs 
from  computations  of  Secretary  of 
Treasury,  21 

Switzerland,  benefit  of  untaxed  tin- 
plate  to,  133 


Tariff,  a  minor  force,  266 ;  act  of 
1824,  63  ;  act  may  be  reached  by 
reasonable  compromise,  129  ;  acts, 
bad  form  of,  34  ;  acts  since  1861 
all  objectionable,  70  ;  and  currency 
debates  in  Cotigressional  Record, 
263  ;  for  "  protection,"  effect  of, 
122  ;  framed  to  raise  or  maintain 
prices  unjust,  4G  ;  high,  cost  of, 
131  ;  how  it  should  be  reformed, 
22  ;  McKinley,  see  McKinley  tariff, 
act,    bill  ;  measure,   simple   to  pre- 


INDEX. 


m 


Tariff — Continued. 

pare,  24  ;  Morrill,  of  1861,  157  ; 
not  distinct  from  tax  or  duty,  2  ; 
one  of  minor  forces  affecting  con- 
dition of  country,  103  ;  our,  framed 
to  obstruct  imports  from  Great 
Britain,  178  ;  of  1824,  63  ;  of  1842, 
267  ;  protective,  of  1842  in  United 
States  enacted  year  of  Peel's  reform, 
48  ;  "  Free-Trade,"  of  1846,  266  ; 
of  1846,  266;  of  1857,  26S  ;  of 
1861,  157;  of  1867,  72;  of  1883, 
78;  of  1890.  see  McKinley  tariff  act, 
1890;  McKinley  tariff,  we  McKin- 
ley ;  on  Canadian  products  de- 
presses price,  194 ;  plank  in  Re- 
publican platform,  251  ;  present, 
many  specifications  inoperative, 
130  ;  question,  difficulty  in  dealing 
with,  V ;  question  should  be  re- 
moved from  party  politics,  73  ; 
question  less  important  than  cur- 
rency, 273  ;  reduction,  neither  party 
has  presented  a  perfect  measure  for, 
69  ;  reduction  would  follow  Repub- 
lican tariff  plank  if  consistently  car- 
ried out,  253 

Tariff  reform,  advocates  err  in  de- 
manding radical  revolution,  129  ; 
continuation  of  both  parties  in,  113  ; 
danger  in  injudicious  methods  of, 
59  ;  in  Great  Britain,  effect  of  first 
measure  not  immediately  percepti- 
ble, 37  ;  method  of,  57  ;  in  Great 
Britain,  first  decisive  step  in,  33  ; 
judicious,  two  measures  necessary, 
59,  60 ;  necessary  to  remove  ob- 
structions to  trade,  266 ;  needed, 
concentration  upon  a  definite  plan 
of  reduction,  23  ;  Peel's  method  the 
proper  one,  38  ;  Peel's  second  great 
act,  37  ;  promoted  by  removing  un- 
important duties,  simplifying  com- 
merce, 23  ;  should  begin  by  mak- 
ing crude  materials  free,  146 

Tariff  reformers  should  question  Re- 
publican candidates,  xvii  ;  resolu- 
tion in  Republican  platform,  xi    . 

Tariff  system,  grave  dangers  would 
ensue  from  bad  methods  of  change, 
267  ;  war,  three  attempts  to  reform 
it,  24  ;  why  a  cause  of  disruption, 
113 


Taxation,  ability  of  this  country  to 
bear  perversion  of,  57  ;  accustoms 
people  to  artificial  support,  155  ; 
aggregate  of  compared  to  product, 
3  ;  and  revenue  derived  therefrom, 
12  ;  and  Work,  motive  of,  261  ;  and 
work,  names  for  same  thing,  5,  259  ; 
and  work  same  thing,  12  ;  burden  of, 
how  measured,  135  ;  burden  of,  as 
borne  by  different  classes,  5  ;  com- 
parative, elements  considered,  42  ; 
depresses  price  of  pig-iron,  195  ; 
diminishes  general  product,  155  ; 
direct  and  indirect,  vii ;  discrimina- 
tion must  be  used  in  choice  of  sub- 
jects of,  74  ;  discrimination  should 
be  used  in  framing  measures,  61  ; 
establishes  disparity  in  cost  of  crude 
materials,  155  ;  fundamental  prin- 
ciples of,  72  ;  judicious  selection  of 
subjects  necessary  for  tariff  reform, 
60  ;  limitations,  set  forth  by  Justice 
Miller,  25  ;  measured  by  work,  69  ; 
must  rest  on  principle,  80  ;  of  crude 
products  unjust,  46  ;  one  method  of 
distributing  annual  product,  2  ;  our 
burden  compared  to  Great  Britain's, 
188 ;  our  burden  of,  though  light, 
is  badly  adjusted,  44  ;  our  burden 
of,  very  light,  8  ;  principle  of,  de- 
fined by  Supreme  Court,  24  ;  ratio 
of  all,  to  product,  8  ;  re-distribution 
of  burden  of,  35  ;  reduces  price  of 
our  crops,  155  ;  robbery,  in  case  of 
bounties  to  aid  private  enterprises, 
117;  should  be  framed  to  protect 
American  workman,  6r  ;  simple  and 
effective  system  will  halve  burden 
of,  154;  sure  method  of  raising 
valuation,  243  ;  system  must  be  sim- 
ple, 73  ;  unlawful,  may  be  imposed 
by  legal  measures,  185 

Tax,  burden  of,  how  measured,  131  ; 
defined,  122  ;  demand  for  work,  4  ; 
most  destructive  form  of,  205  ;  not 
put  on  other  countries,  139  ;  on  fin- 
ished products,  cost  of,  140  ;  on 
silver,  how  it  might  beimposcd,  246; 
on  silver,  how  it  should  be  levied, 
248  ;  on  tin-plate  reduces  wages, 
134  ;  power  to,  defined  by  Justice 
Miller,  24  ;  upon  State  banks,  217  ; 
various  definitions  of,  2 


294 


INDEX. 


Taxes,  and  armies,  great  burden 
of,  log  ;  evils  of,  27  ;  municipal 
and  national,  compared,  v  ;  not 
put  upon  others,  256 ;  paid  by 
peojile  which  government  docs 
not  receive,  28  ;  received  by  govern- 
ment all  paid  liy  people,  2  ;  tliat 
people  pay  government  must  re- 
ceive, 73 

Tea,  coffee,  sugar,  remission  of  duties 
on,  78 

Tenure  of  office,  no  assurance  of, 
during  efficient  and  honest  service, 

41. 

Textile,  fabrics,  and  metal  industries, 
stimulated  by  tariff,  have  had  no  ex- 
cessive profits,  99  ;  consumption  of, 
153  ;  fabrics,  duties  on,  26 

Thompson,  Professor  Robert  Ellis, 
sustains  policy  of  Protection,  85  ; 
his  ground  contested,  87 

Timber,  our  supremacy  in  product  of, 
148 

Tin-plate,  additional  cost  of,  under 
McKinley  tariff,  65  ;  arguments 
of  Senators  in  favor  of  tax  on, 
131  ;  effect  of  abatement  of  tax 
on,  133  ;  industry  loathsome  and 
undesirable,  65  ;  tax  "  no  l)urden  !  " 
131  ;  tax,  true  burden  estimated, 
132 

Tin-plates,  futile  attempt  to  establish 
manufacture  of,  124  ;  great  advan- 
tage to  farmer  and  canner  when 
tax  is  removed,  62  ;  tax  on,  cuts  off 
Great  Britain's  means  of  payment 
for  our  products,  66 

Tobacco,  and  wool,  only  agricultural 
products  of  Pennsylvania  which 
could  be  imported,  55  ;  tax  upon, 
raises  price  to  consumer,  243 

Tonnage  moved  by  rail,  1890,  221 

Tons  moved  over  railways  in  1882  and 
1890  compared,  215,  216 

Trade,  and  tVee  Trade  defined,  121  ; 
and  transportation,  number  em- 
ployed in,  53,  227 ;  bad  effect 
of  interference  with,  66  ;  immense 
volume  of,  endangered  by  project 
for  free  coinage,  226  ;  volume  of, 
220 

Transactions,  measure  of  Ijusiness, 
225 


Treasurer  of  the  United  States,  salary 

of,  40 
Treasury  Department,  cost  of,  il 


U 


Uncle  Sam  asked  what  he  has  done 
with  product  of  people's  work,  10 

Under-fed  Europeans,  how  they  can 
buy  our  products,  191 

Unholy  Alliance  of  Pig-iron,  Wool, 
and  Silver,  173 

Union  Pacific  I^.  R.  sinking-fund,  11 

United  States,  and  Canada,  competi- 
tion with  Great  Britain  in  supply  of 
non-machine-using  nations,  171  ; 
facilities  for  export  of  machine- 
made  goods,  172  ;  material  welfare 
of,  276  ;  now  leads  in  application  of 
machinery  to  production,  171  ;  value 
of  product,  110 

Unit  of  value,  will  of  the  people  on, 
73 

V 

Vespucci,  Amerigo,  108 
Vice-President,  salary  of,  40 

W 

Wages,  abroad  and  at  home,  what  is 
exact  difference?  xiv  ;  advance  in, 
not  due  to  high  tariff,  95  ;  advance 
in  rates  since  1880,  169  ;  and  prices, 
statistics  in  census  of  1880,  166  ; 
Cairnes'  theory  of,  161  ;  effect  of 
our  tariff  upon  foreign,  269  ;  Francis 
A.  Walker's  theory  of,  161  ;  fund, 
misconception  of,  160  ;  high  rates 
of,  correlative  of  production  of 
goods  at  low  cost,  84  ;  increase  in 
rates  of,  since  1880,  94  ;  in  Europe 
lower,  cost  of  labor  higher,  187;  in 
manufacture  of  agricultural  imple- 
ments, 96  ;  in  Nova  Scotia  and  New 
Brunswick  compared  to  Maine, 
198  ;  lower  in  protected  than  un- 
protected arts,  99  ;  maintenance  of 
rate  depends  upon  financial  sta- 
bility, 228  ;  Protection  does  not 
raise,  93  ;  purchasing  power  in 
food,  203  ;  rates  of,  in  Great  Britain, 


INDEX. 


295 


Wages — Continued. 

182  ;  rates  of,  rest  upon  adequacy  of 
food  supply,  177  ;  ratesof,  we  should 
not  seek  to  equalize,  54  ;  rise  stimu- 
lated by  manufacturing  activity,  23  ; 
steady  rise  in,  ix  ;  we  can  pay  high- 
est, 184 

Wagons,  price  in  i860  and  1880,  168 

Wales,  tin-plate  workers  in,  65 

Walker,  Francis  A.,  theory  of  wages, 
161  ;  Robert  J.,  framer  of  tariff  of 
1846,  267 

War-burden,  effects  of  tremendous, 
109  ;  mostly  incurred  by  attempts 
to  restrict  commerce,  108  ;  upon 
Germany,  Austria,  and  Italy,  43 

"  War  of  all  against  all  "  the  tendency 
of  isolation  by  high  tariffs,  174 

War  tax,  European,  computed  in 
terms  of  work,  43  ;  measured  in 
money,  42 

War  of  1 8 12,  effect  on  trade,  47 

Waste  of  misdirected  taxation,  154 

Wealth,  and  poverty  sharply  con- 
trasted in  Great  Britain  in  1840,  35  ; 
assured  in  inverse  proportion  to 
natural  resources,  157 

Webster,  Daniel,  defence  of  Free 
Trade  in  1S20,  ir8  ;  defender  of 
Constitution,  1 19;  great  speech  on 
Free  Trade  at  Faneuil  Hall,  47 ; 
later  sustains  protective  policy,  49  ; 
on  "  foreign  paupers,"  192  ;  opposes 
protective  system  in  debate  with 
Clay,  48 

Weeks,  Joseph  U.,  thorough  work  on 
statistics  of  wages  and  prices,  t66 

Wells,  David,  A.,  upon  disparity  in 
cost  of  pig-iron  to  American  con- 
sumers, 29 

Wheat,  average  price  of,  in  Mark 
Lane  between  1S70-1S87,  102  ; 
California,  produced  at  highest  rates 
of  wages,  lowest  cost  of  production, 
164  ;  Canadian,  196  ;  cost  of  pro- 
duction compared  to  rate  of  wages, 
102  ;  cost  on  Western  farms,  102  ; 
export  of,  replaced  by  flour,  loi  ; 
gain  between  1873-1887,  102;  labor 
cost  in  birrel  of  flour  i860  and 
1880,  16S  ;  margin  of  profit  con- 
trols export  trade,  134  ;  place  of 
production    changed,    164 ;    present 


price  per  quarter,  102  ;  reduction 
in  charges  of  handling  and  moving, 
102  ;  reduction  in  price  on  account 
of  competition  of  United  States 
with  Great  Britain,  loi 

Whig  party.  Republicans  compared 
to,  258 

Wilson,  Wm.  L.,  work  on  the  Mills 
tariff  bill,  69 

Women,  arduous  field  work  in  Europe, 
186 

Working  community,  average  product 
of,  3  . 

Workman,  ill-nourished  in  Europe, 
igo  ;  receives  here  increasing  share 
of  increased  product,  162 

Workman's  money  must  be  equal  to 
banker's  money,  73 

Workmen  should  be  considered  before 
capitalists,  46 

Work  required  to  support  all  who 
perform  government  work,  7 

World's  commerce,  centre  might  be 
transferred  to  this  continent,  231  ; 
centre  of,  231 

IVorld's  Exc flanges.  The,  233 

Wool,  and  cotton,  useful  fabrics  should 
be  exempt  from  taxation,  153  ;  and 
woollens,  present  provisions  of 
McKinley  bill  on,  77  ;  and  wool- 
lens, tariff  on,  xiii  ;  and  woollen 
tariff,  76  ;  and  woollen  tariff,  for- 
mer arguments  against,  63  ;  be- 
lieved that  duty  on  foreign,  would 
protect  domestic  wool-grower,  77  ; 
duty  on  foreign,  depresses  domestic, 
94  ;  effect  of  duty  on,  30  ;  effect  of 
obstruction  of  import,  30  ;  effect  of 
tax  upon,  141  ;  effect  of  various  high 
tariffs  on  price  of,  63  ;  hemp,  flax, 
and  other  fibres  put  on  free  list  in 
the  Mills  bill,  69  ;  injured  by  "  pro- 
tective" tax,  63;  lalior  cost  un- 
known, xvi  ;  must  be  separately 
treated  in  tariff  legislation,  92  ; 
must  go  in  free  list,  xvi ;  pig-iron, 
and  silver,  representatives  of,  make 
use  of  Republican  party,  253  ;  price 
of  domestic,  advances  under  freer 
trade,  63  ;  put  in  free  list  in  Great 
Britain  l)y  Huskisson,  33  ;  reason 
of  attempt  to  exclude  foreign,  iSi  ; 
Texan,  compared  with  Australian, 


296 


INDEX. 


Wool — Continued. 
xvi  ;  value  of,  49  ;  wliy  duty  lowers 
price,  30 

Woollen  and  worsted,  fabrics,  ad- 
valorein  duty  on,  77  ;  fabrics,  in- 
creased import  of,  124  ;  manufac- 
tures in  1890,  report  on,  gi 

Woollen,  manufacturers  argue  against 
duty  on  wool  before  Ways  and 
Means    Committee,    77 ;    manufac- 


tures, specific  compensatory  duty 
upon,  77  ;  trade,  balance  of  industry 
explained  in,  64 
Wright,  Col.  Carroll  D.,  facts  about 
iron  and  steel  industry  not  disclosed 
to,  xvi  ;  investigations  on  rate  of 
wages  and  cost  of  labor,  viii ;  on 
wages  and  cost  of  subsistence  abroad, 
200  ;  work  on  Seventh  Report  of 
Department  of  Labor,  204 


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